The rural fuel rebate scheme will be extended to 17 new areas from May 31, with retailers able to register for the scheme from 1 April, chief secretary to the Treasury Danny Alexander has announced.

The Rural Fuel Rebate has been approved by the European Union (EU) following a year-long approval. It is the first time the EU has approved a fuel discount on the UK mainland, as it is currently only available on the UK’s most rural islands.

Alexander said: “Thanks to my action in government, motorists across some of the UK’s most remote rural areas will now benefit from a fuel discount. I have made introducing the Rural Fuel Rebate a top priority because I know from my own experience that cars are a necessity, not a luxury, for people living in remote communities – and that petrol in these areas is far more expensive than the rest of the UK.

“People will see lower prices from the end of May, with filling stations in the 17 selected areas able to register for the scheme from 1 April. Combined with the current fall in oil prices and the freeze in fuel duty rates nationwide, this 5p discount on fuel prices will provide a much-needed boost to families who face the highest fuel prices.”

The 17 areas which will benefit from the price cut are:

• IV54 (Highland – Scotland)

• IV26 (Highland – Scotland)

• IV27 (Highland – Scotland)

• NE48 (Northumberland – England)

• PH41 (Highland – Scotland)

• KW12 (Highland – Scotland)

• PA80 (Argyll and Bute – Scotland)

• PH36 (Highland – Scotland)

• IV22 (Highland – Scotland)

• PA38 (Argyll and Bute – Scotland)

• PH23 (Highland – Scotland)

• PH19 (Highland – Scotland)

• IV21 (Highland – Scotland)

• LA17 (Cumbria – England)

• EX35 (Devon – England)

• IV14 (Highland – Scotland)

• Hawes (North Yorkshire – England)

Retailers of road fuel within these areas will be eligible to register with HM Revenue & Customs (HMRC) and to claim back 5ppl duty relief on purchases of unleaded petrol and diesel on a monthly basis.

The areas were selected using the following criteria:

• pump price threshold: pump prices have to be more expensive than the lowest pump price on the islands in the existing scheme

• cost of transporting fuel: areas have to be more than 100 miles by road from the nearest refinery

• population density: the population density must be no higher than any area in the current scheme

The current rural fuel rebate scheme came into effect in March 2012 and allows retailers of road fuel within the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly to register with (HMRC) to claim back 5ppl relief on sales of unleaded petrol and diesel.

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