Income Tax (Earnings and Pensions) Act 2003 section 627

Meaning of "grossing up"

Section 627 explains what is meant by the term "grossing up" as used elsewhere in the Act.

• Grossing up is the process of converting a net amount into its gross equivalent by reference to the applicable tax rate
• This section provides a formal statutory definition of the concept, even though grossing up is a familiar and well-established principle in tax practice
• The definition applies wherever the term "grossing up" is used throughout the Income Tax (Earnings and Pensions) Act 2003
• This was a new provision when enacted, as the predecessor legislation (ICTA) used the concept without formally defining it