The government has announced that it is seeking permission from the European Commission (EC) to extend the island fuel rebate scheme to other remote rural areas of the UK with higher fuel costs.

This follows the move in 1 March 2012 which saw motorists in remote island communities including the Inner & Outer Hebrides, Northern Isles, Islands in the Clyde and Isles of Scilly benefitting from a 5p per litre discount on pump prices. The government is now planning to extend this relief to remote inland areas over autumn.

Any discount on the standard rate of fuel duty requires a derogation from the EU Energy Tax Directive and EC clearance.

As the government prepares to apply for EC permission, it is asking fuel retailers in remote areas of the UK such as Angus, Cumbria, Cornwall and the Scottish borders to provide information on how much they charge for petrol and diesel as evidence to support the application.

Nearly 1,500 retailers in 36 counties and districts in England, Wales, Scotland and Northern Ireland are being consulted.

The extension is expected to apply to inland areas where prices were consistently similar to those on the islands.

Areas where fuel is priced consistently below these levels are unlikely to be included in the extension.

Under the current Island rebate scheme, retailers of road fuel within the areas concerned can register with HMRC to claim a five pence per litre relief on fuel purchased for onward retail sale.

Retailers can make claims on a monthly basis and have 60 days following registration to reduce the cost of every litre of road fuel sold by the equivalent amount of the relief claimed.

Chief Secretary to the Treasury Danny Alexander said: 'The island fuel rebate provides much needed help to keep down fuel prices in areas where costs of transporting fuel mean prices are much higher. I know that there are other remote rural areas of the UK with similarly high fuel costs.

'We will need to prove that there are areas which are similar to the islands in terms of pump prices and distribution costs, so I would urge local areas that may qualify to provide the information we need to make the case as robust as possible.'

More details are available from Gov.uk HERE