App Store and iTunes Prices in UK May Increase Up to 20%

Apple's iTunes and App Store downloads may see a price increase next year when new UK laws take effect.

The Guardian reports that the most recently introduced budget closes a loophole that allowed digital downloads to avoid UK taxes.

The budget document said: "As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue."

Digital download retailers such as Apple and Amazon presently avoid the UK's 20% VAT by selling from countries such as Luxembourg where the tax rate is only 3%-15%. Under the new law, downloads to UK customers will be taxed at the higher 20% rate. Apps may be least affected as they are presently taxed at the higher range of 15%.

The change appears to affect all digital downloads including music, apps, and e-books, and will take effect on January 1, 2015.