What is a Personal Service Company?
A Personal Service Company (PSC) is a private limited company established by a UK independent contractor, typically with that individual serving as its sole director and shareholder. The PSC acts as an intermediary, contracting with and invoicing clients on the individual's behalf rather than the contractor receiving payment directly as an individual. While "Personal Service Company" is not a formally defined term in UK law, it is the standard industry classification for this corporate structure.
Generally, a client pays the PSC without deducting tax at source. However, this tax treatment depends on the engagement's status under the UK's off-payroll working rules (IR35). Invoicing through a PSC does not automatically establish self-employment for tax purposes; the IR35 determination process assesses the underlying, day-to-day working relationship—including factors like operational control, substitution, and mutuality of obligation—regardless of the corporate structure the contractor uses to invoice.
How enterprise organizations use Personal Service Company (PSC) for UK contractor engagement under IR35
Enterprises regularly encounter PSCs when engaging independent contractors in the UK. Because invoicing through a PSC does not automatically determine a contractor's IR35 status, corporate legal, tax, and contingent workforce teams generally must evaluate the underlying working relationship of PSC contractors to ensure accurate classification, generate a Status Determination Statement (SDS), and maintain appropriate tax compliance.
Personal Service Company (PSC) use cases
Evaluating whether a UK contractor operates through a PSC or an umbrella company prior to onboarding.
Determining the appropriate IR35 tax treatment and SDS requirements for a worker invoicing through a PSC.
Comparing the compliance and administrative requirements of engaging a PSC contractor versus utilizing an Employer of Record (EOR).
Reviewing payroll routing to ensure appropriate tax and National Insurance deductions are made when a PSC engagement falls inside IR35.
How Lifted handles Personal Service Company (PSC)
Lifted's Agent of Record and Employer of Record offerings help enterprises engage UK contractors compliantly, regardless of whether an individual contractor operates through a PSC, an umbrella company, or another structure, by routing each engagement through the model that fits the work and the applicable rules.
Frequently asked questions
What is a Personal Service Company (PSC)?
A PSC is a UK contractor's own limited company, typically with the contractor as sole director and shareholder, used to invoice clients instead of being paid directly as an individual.
Does using a PSC mean a contractor is outside IR35?
No. Operating through a PSC doesn't by itself determine IR35 status. The determination generally looks past the corporate structure to evaluate the actual day-to-day working relationship.
What's the difference between a PSC and an umbrella company?
A PSC is the contractor's own limited company, generally giving them more control over their tax and administrative affairs. An umbrella company employs the contractor and handles payroll and tax administration on their behalf.
How is a PSC taxed if an engagement is inside IR35?
When an engagement is inside IR35, tax and National Insurance are generally deducted before payment reaches the contractor, similar to employment, even though the contractor is invoicing through their PSC.
