Price of apps, ebooks and music downloads could rise due to UK tax law changes

George Osbourne’s change to UK tax laws will close a loophole which currently lets consumers pay low VAT rates on online purchases of apps, books and music.

The changes may take force at the start of 2015, pushing the price of download and e-services higher in the UK.

Currently, companies such as Apple can sell digital downloads through countries like Luxembourg, where the tax rate is much lower than in the UK.

Osbourne’s budget document states: "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."

The Guardian reports that this could raise an extra £300 million for the Treasury, warning that online retailers may pass on those costs to consumers in the form of higher prices.