Rural Fuel Rebate Pilot Scheme

Friday 25th November 2011 Written Statements

[The Chief Secretary to the Treasury (Danny Alexander)]

I am today announcing that the Government have secured EU clearance for a rural fuel rebate pilot scheme. The scheme will apply a 5p per litre discount on petrol and diesel in the Inner and Outer Hebrides, Northern Isles, the islands in the Clyde and the Isles of Scilly.

The scheme will provide much-needed relief to these remote island communities. Pump prices in these areas are particularly high due to the high costs of transporting and distributing fuel.

The Government intend to introduce a retailer-based scheme. Registered retailers will be required to reduce their selling prices of road diesel and petrol by 5ppl. Retailers will claim a 5ppl rebate on the fuel they purchase, by submitting a monthly claim to HMRC.

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 5ppl refund on fuel purchased in each of their first two months in the scheme without having to pass on the discount to customers. Following this, retailers will then be required to fully pass on the 5ppl discount. This design will ensure that there are no adverse cash-flow problems for the retailers and that from 1 March 2012 motorists will benefit from a 5ppl reduction in pump prices.

HMRC have today published the draft legislation for the pilot scheme.