Uh-oh, it looks like UK music lovers are about to take a financial beating, as a tax loophole is about to be corrected – resulting in what is set to be a mass bump up of download prices.

Affecting consumers of online purchasable music, e-books and apps, the UK government is planning to implement a finance bill. Set to be written into legislation in January 2015, the bill will add on the 20% value added tax (VAT) rate on all purchases.

Consumers have been evading the tax until now, enabled by web companies passing sales through countries with lower tax rates (take Luxembourg for example – where the tax rate is just 3%). The new laws will see an end to this – meaning no more 99p tracks and a kiss goodbye to the days where you could rave for the price of a fruit salad sweet.

Although street retailers are fuming over the current laws (those still exist?) and openly welcome the tax increase, we wonder what this could do to the climate of music consumption. If tax goes up on downloadable tracks the money goes straight into the pocket of the government – not a penny more is earned by the artist. Will the tax hike encourage people to download an increased amount of music illegally? We’re guessing to bet that it will.

The new tax is estimated to raise about £300m for the government, lets hope that it goes towards David Cameron’s toupé fund.

[via The Guardian]