Apps and music downloads could see price hike

It wasn't exactly one of the headlines of last week's budget, but one particular change could have quite an effect on your wallet.

According to The Guardian, George Osborne closed a tax loophole that meant consumers were paying VAT at very low foreign rates on online purchases of books, music and apps. The new rules mean downloads are taxed in the country where they are purchased - so the likes of Amazon and Apple will have to charge the UK's 20% rate of VAT instead of rates as low as 3%.

The change comes in from 1 January 2015. Official estimates point to an extra £300m raised for the Treasury, but the flipside is, of course, that the costs will be passed onto the consumer in the form of higher prices.

Research produced by Greenwich Consulting previously has claimed Britain could have financed the Olympic Games from the VAT it will have lost on the sales of digital services between 2008 and 2014. In 2012 alone, it said that the UK was losing more than €2bn (£1.6bn) a year in VAT on digital services.

Not so from next year – it might be good for the country, but it might not be good for your bank balance in the long run.

Source: The Guardian

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