Hopes grow that British TV and film industry will strike deal to cut punishing business rates

Magic: Clockwise from top, Margot Robbie as Barbie, Timothee Chalamet as a Willy Wonka and Harrison Ford and Phoebe Waller-Bridge in Indiana Jones and the Dial of Destiny

Film and TV companies are understood to be in the final stages of hammering out a deal with the Government over a tax on new studios that many fear could wreck the booming industry.

The UK has increasingly become a competitor to Hollywood in recent years and the £6.3 billion sector is championed by Ministers as a major success story.

Blockbusters including Barbie, Wonka and Indiana Jones and the Dial of Destiny have all been filmed in Britain.

One of the reasons production companies have flocked here is because of generous tax breaks.

But new studios – defined as those that were not up and running by last spring – are facing astronomical rises in business rates that companies were not expecting. TV and film groups including Pinewood Studios, Sky and Warner Bros Discovery have all lashed out at the hike.

Business rates are taxes that are based on the amount a property could be rented out for if it was on the open market.

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

In a submission 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 ones could become ‘financially unviable’ unless rates are re-evaluated.

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

Studios that were operating before the deadline will see a maximum rate rise of 30 per cent. But rates for those opening since last spring will jump by an average of 300 per cent under the new valuations, according to reports. One studio will reportedly see rates rocket by 650 per cent.

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

The industry, represented by the British Film Commission, has been locked in talks with the VOA and was asked to provide more information earlier this year.

They are hoping to pin down a decision in the New Year, a source told The Mail on Sunday.

A Sky spokesman said: ‘The UK has done lots of the right things to help creative industries thrive, but if it wants to win in a global game, it’s time for Jeremy Hunt to call ‘Action!’ on studio business rates.’

Independent studios are likely to struggle much more than those owned by multinational companies.

Superna Sethi, of Twickenham Film Studios, where Bohemian Rhapsody was filmed, has previously described the valuations as throwing ‘a grenade’ at the film industry. She said it could mean the ‘death knell for a number of the UK’s most historic independent film studios’.

A spokesman for the VOA said: ‘We are working closely with representatives of the industry to assess whether there are grounds for any change to rateable values.

‘Every effort is being made by all parties to resolve the situation as soon as possible.’

This post first appeared on Dailymail.co.uk