Chief Secretary to the Treasury Danny Alexander has today announced that from March 2012 motorists in remote island communities will benefit from a 5 pence a litre fuel discount.
The announcement came after the Government received final EU clearance to operate its rural fuel rebate pilot scheme in the Inner & Outer Hebrides, Northern Isles, islands in the Clyde and the Isles of Scilly.
The scheme will bring much needed relief to remote islands, where pump prices are particularly high due to transportation costs.
Danny Alexander said:
This is terrific news for island communities, which have long suffered the effects of high fuel costs. From 1 March next year, islanders will see a 5p cut in the pump price of petrol and diesel.
As well as securing EU clearance, we have produced a scheme designed to protect the cashflow of local retailers. We have also delivered on a promise to help address the persistent unfairness of some of the lowest income communities in the country paying among the highest pump prices.
After years of people saying this could not be done, the Government has delivered it in less than two.
This is another example of our determination to govern for the benefit of the whole United Kingdom.
Fuel retailers on the islands will receive a 5p a litre rebate on the petrol and diesel they purchase and will be required to pass on the full saving to the customer.
To ensure that retailers suffer no cashflow problems in passing on the discount from 1 March, they will be able to claim the 5p rebate from HM Revenue & Customs (HMRC) on fuel purchased from 1 January next year.
Notes for editors
The Government intends to begin the rural fuel rebate pilot scheme from 1 January 2012, with retailers required to pass on the discount in pump prices from 1 March 2012
Draft legislation for the pilot scheme has today been published on the HMRC website (opens in new browser window).
To implement the pilot scheme, the UK required derogation from the Energy Tax Directive.
To support retailers in covering the initial costs of the scheme, HMRC will provide an up-front rebate. From 1 January 2012, retailers will be allowed to claim a 5p a litre refund on fuel purchased in each of their first two months in the scheme, without having to pass on the discount to customers until 1 March 2012. Retailers will submit a claims form once a month for fuel purchased during that period, and can expect the rebate no more than 30 days later.
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