Personal Service Company (PSC) Guide

What is a personal service company (PSC)?

A personal service company (PSC) is a limited company, usually controlled by one contractor, through which that contractor provides their own services to clients. The client or agency contracts with the company, not the individual. The company invoices, pays tax on its profit, and pays the contractor a salary and dividends.

HMRC says a PSC "is not defined in law". It is typically a limited company that a worker controls and has some interest in. It is the most common type of intermediary under the off-payroll working rules, known as IR35. A PSC is an ordinary UK private limited company registered at Companies House. What makes it a PSC is how it is used, not a special legal form.

You may also see "personal services company", "PSC limited company", "limited company PSC" or "PSC contractor". They all describe the same arrangement. "Personal service corporation" is a US term and does not apply in the UK.

Who uses a PSC?

PSCs are common among IT contractors, engineers, consultants, interim managers, medical locums and other freelancers who work for several clients, or one client at a time, on fixed-term contracts. A PSC contractor is simply a worker who supplies services through their own limited company.

How a personal service company operates

A PSC is a separate legal entity. It keeps its own accounts and bank account, and it files its own tax returns.

1. Contracting: the end client or agency signs a business-to-business contract with the PSC.
2. Invoicing: the PSC invoices for the work, adding VAT if it is VAT-registered.
3. Corporation Tax: the PSC pays Corporation Tax at 19% on profits up to £50,000, 25% above £250,000 and a blended rate in between.
4. Paying the contractor: the contractor takes a salary through payroll and, if there are profits left, dividends.
5. Personal tax: the contractor reports salary and dividends on a Self Assessment return and pays any dividend tax due.

PSC, umbrella company or sole trader?

Since 6 April 2026 there are also new PAYE rules for labour supply chains that include umbrella companies. HMRC's umbrella company guidance explains how umbrella pay works.

PSC and IR35 (off-payroll working)

IR35 makes sure a worker who provides services through their own intermediary pays broadly the same Income Tax and National Insurance as an employee would, if they would have been an employee of the client had there been no PSC. It applies contract by contract, so one PSC can have an inside IR35 contract and an outside IR35 contract at the same time.

• Outside IR35: the engagement is genuine self-employment. The PSC is paid gross and the contractor extracts profit through salary and dividends.
• Inside IR35: the engagement is treated as employment for tax. Income Tax and employee National Insurance are deducted from fees paid to the PSC, and employer National Insurance is paid by the deemed employer.

Who decides depends on the client. For public sector clients and medium or large private sector clients, the client decides and must provide a Status Determination Statement (SDS) with reasons. For a small private sector client, the PSC decides the status itself and, if the rules apply, works out a deemed employment payment. HMRC's Check Employment Status for Tax tool can help. Read our IR35 guide or the 2026/27 IR35 explainer.

Worked example: a PSC outside IR35 in 2026/27

Jordan runs a PSC. In its 2026/27 financial year the company invoices £80,000 (excluding VAT), has £12,000 of allowable costs and pays Jordan a salary of £12,570. Jordan is the only employee, so the company cannot claim Employment Allowance. Jordan takes all the remaining profit as a dividend. This is an illustration, not a recommendation.

Jordan receives £12,570 in salary, covered by the Personal Allowance, and £43,656 − £6,128 = £37,528 net of dividend tax. Salary at £12,570 is equal to the primary threshold, so Jordan pays no employee National Insurance. Marginal Relief is £250,000 − £54,294.50 = £195,705.50 × 3/200 = £2,935.58, taken off 25% × £54,294.50 = £13,573.63. The result is for illustration. Sources: Corporation Tax rates, tax on dividends and employer rates and thresholds. Dividend rates rose by 2 percentage points for basic and higher rates from April 2026, so older salary-and-dividend examples are out of date. See director salary and salary vs dividend.

What running a PSC involves

• Register the company at Companies House and with HMRC for Corporation Tax.
• Run payroll if you take a salary, and file Real Time Information submissions.
• File annual accounts and a Corporation Tax return (CT600), and a Confirmation Statement each year.
• Keep dividend paperwork: board minutes and vouchers for each payment.
• File a personal Self Assessment return each year.
• Register for VAT if taxable turnover passes the threshold, or earlier if it helps. See the VAT registration threshold guide.

PSC and "person with significant control": do not mix them up

• Personal service company (PSC): the contractor business structure described on this page.
• Person with significant control (PSC): a Companies House term for anyone who owns more than 25% of the shares or voting rights, or otherwise controls a company. These appear on the company's register and are confirmed in the Confirmation Statement (CS01).

Is a personal service company right for you?

A PSC suits some contractors, mainly those with outside IR35 contracts, regular work and enough profit to justify the admin. It suits others less, for example inside IR35 contracts, short engagements or low profit. Compare it with an umbrella company or working as a sole trader using our sole trader vs limited company guide. For the contractor service, see our contractor accounting page and accountants for contractors.