Hopes are growing that Britain's TV and film industry will strike a deal to cut burdensome business rates

Film and TV companies are said to be in the final stages of striking a deal with the government over a tax on new studios that many fear could destroy the booming industry.

Britain has increasingly become a rival to Hollywood in recent years and the £6.3 billion sector is being defended by ministers as a major success story.

Blockbusters such as Barbie, Wonka and Indiana Jones and The Dial of Destiny were all filmed in Britain.

One of the reasons manufacturing companies have moved here is because of generous tax breaks.

But new studios — defined as studios that weren't up and running last spring — are facing astronomical increases in business rates that companies weren't expecting. TV and film groups including Pinewood Studios, Sky and Warner Bros Discovery have all hit out at the walk.

Business rates are taxes based on the amount for which a property could be rented if it were on the open market.

Sky, owned by US company Comcast, is among those affected as it spent years planning new, state-of-the-art studios with sound stages that were not open before the cut-off date.

In a contribution to a public consultation on the film industry opened by the Department for Culture, Media and Sport, Sky said setting up new sites or expanding existing sites could become 'financially unviable' unless rates are reset evaluated.

The Valuation Office Agency (VOA), responsible for business rates, says the explosion of streaming services such as Netflix and Amazon has increased demand for studios, making them more valuable.

For studios that were active before the deadline, a maximum rate increase of 30 percent applies. But according to reports, rates for those that opened since last spring will increase by an average of 300 percent under the new valuations. One studio will reportedly see rates increase by 650 percent.

Film and TV groups had not budgeted for the increases and many have said they may think twice about investing in the UK in the future, raising concerns that new location development could collapse.

The industry, represented by the British Film Commission, is in discussions with VOA and was asked to provide more information earlier this year.

They hope to make a decision in the new year, a source told The Mail on Sunday.

A Sky spokesperson said: 'The UK has done many of the right things to help the creative industries thrive, but if it wants to win in a global game, it's time for Jeremy Hunt to shout 'Action!' about studio operating rates.”

Independent studios are likely to have a much more difficult time than studios owned by multinational companies.

Superna Sethi of Twickenham Film Studios, where Bohemian Rhapsody was filmed, has previously described the ratings as throwing 'a grenade' at the film industry. She said this could be the 'death blow to some of Britain's most historic independent film studios'.

A VOA spokesperson said: 'We are working closely with industry representatives to assess whether there are grounds for any change to rateable values.

“Everything is being done by all parties to resolve the situation as quickly as possible.”