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99p music downloads threatened by VAT crackdown

George Osborne's budget announcement seeks to tackle a VAT loophole that has been losing the UK an estimated £1.5 billion a year. Credit: Terry Scott/NEWZULU/PA Images

The future of the 99p music download looks bleak because of a change in VAT rules as the Treasury bids to reclaim more than £300 million in tax from tech giants like Apple and Amazon.

Chancellor George Osborne announced in last week's budget that multinational firms will have to pay the UK's standard 20% levy on all digital sales to British customers from next year.

Both Apple and Amazon currently benefit from a lower VAT rate on music downloads from their online stores like iTunes and Google Play by operating out of Luxembourg.

The changes are expected to see the 99p rate for a single download rise when the new rules take effect in January to end the loophole.

Apple celebrates decade of iTunes

Apple was today hailed for pioneering a "listening revolution" as it prepared to celebrate a decade of iTunes.

The music store, which started out more than a decade ago with 200,000 songs, reached its 25 billionth download earlier this year.

There have been over 25 billion downloads on iTunes in the ten-year period. Credit: Niall Carson/PA Wire/Press Association Images

Since its launch on April 28 2003, iTunes has accrued a catalogue of more than 35 million songs and has around 435 million active account-holders across the world.

On average, more than 15,000 songs are downloaded every minute and according to the technology website Pocket-lint, it would take more than 140,000 years to listen to every single music download available through the famous store.

Gennaro Castaldo, of HMV, said the music store - along with the iPod - had "undoubtedly" played a major part in changing the way consumers discover and listen to music.