Grossing up

Updated: Aug 20, 2021

Finding the gross amount of any receipt of income which is actually paid net of income tax. This allows a taxpayer’s total gross income to be calculated; for example, if a UK taxpayer receives £78 net of tax and the tax rate is 22 per cent, their grossed up income is £100. Any allowances due are then subtracted to find taxable income, and tax payable. The total tax payable is compared with tax already deducted at source: if too little tax has been deducted the taxpayer then gets a demand for the remainder, and if too much tax has been deducted the taxpayer gets a refund.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.