There are other products priced at $99 in the US, and they are about £80 or so (as someone else said, e.g. AP express).
It's clearly that Apple think they can get away with the price being more in the UK, not for reasons of duty or additional taxes. If this were the case, then the airport express would be £99, not £81. And it's unlikely that there is some separate "TV Devices" tax compared to a wi-fi base station 'tax'...
Basically, apple are taking the piss. Although it's cheaper than the old one, I refuse to pay 30% more for exactly the same thing that's selling in the US.
And as someone pointed out, we can't even get Netflix here - one of the main updates to the device.