BBC Media Correspondent Nick Higham says the decision could prove embarrasing for "Cool Britannia"

The legendary multi-millionaires have cancelled the British leg of their world tour this summer, saying the Chancellor of the Exchequer's tax changes would leave them £12 million worse off.

Jonathan Colchester, from Credit Suisse private banking: "Tax law affects more than musicians"

Frontman Mick Jagger said that if they went ahead with their four British summer concerts, scheduled for August, the entire European tour would run at a loss.

Earlier in June the band's lawyers lobbied MPs, saying Labour's plans to close a tax loophole affecting earnings abroad was unfair.

British shows would have meant filling in one of these

In their submission to the House of Commons Finance Bill Committee, the lawyers said the band and their 270 crew would suffer because they only get paid at the end of the tour.

Mick Jagger, who is rehearsing in Munich, told The Times newspaper the band had cancelled the UK dates because it would have been "foolish" to run at a loss.

"I was tempted to bite the bullet, but I am not the only one affected," said the singer.

"A Rolling Stones world tour is a two year project and there are over 200 people involved."

Gordon Brown: Also tough on rock bands

He said the decision had been taken for business rather than political reasons.

"I don't have an axe to grind," he said.

"I'm not a party political animal and the Government isn't run for my convenience."

The 42-date European leg of the Bridges to Babylon tour started in Berlin on May 22.

The band had planned four British dates - two in London and one each in Edinburgh and Sheffield.

These are now rescheduled for June 1999 - a new tax year.

New tax law

Treasury: Won't be getting satisfaction this time

The new law closes a loophole which allowed British residents to earn money tax-free if they worked outside of the UK for more than a year, providing they do not spend more than 62 days at home.

The rule was introduced 20 years ago to encourage people to work abroad and to help employers set up overseas.

Treasury officials say the change aims to be fair to every tax payer.

Changes to tour

The Bridges to Babylon tour had already been disrupted after guitarist Keith Richards injured himself falling from a ladder in his library.

European dates recommence with a concert in Nuremberg, Germany, on June 13 and continue across the continent.