A personal service company (PSC) is a limited company that an independent professional sets up and contracts through, instead of invoicing a client directly as an individual. In the UK, the off-payroll working rules — IR35 — are written around exactly this arrangement: a worker who provides their services through their own intermediary, "usually a personal service company". A PSC is a legitimate way to run a contracting business, but it does not, by itself, put you outside IR35. The rules look through the company and ask whether — behind it — you "would have been an employee if [you] were providing [your] services directly to that client". Who actually makes that decision depends on the client: for public-sector and medium or large private-sector clients, the client decides and issues a Status Determination Statement (SDS); for small private-sector clients, your own PSC remains responsible. The company is the vehicle; your status turns on the real working arrangement.
This is general information about how the UK off-payroll (IR35) rules treat a personal service company, not legal or tax advice. IR35, CEST and PSCs are UK concepts and do not apply in the US or elsewhere; your status depends on your actual working arrangement, and the rules change. Take professional advice before acting on your own situation.
What is a personal service company?
A personal service company is a limited company that an individual sets up to provide their own professional services through, rather than invoicing clients directly or being taken onto a payroll. There is no separate legal category called a "personal service company" in UK company law — it is an ordinary limited company that happens to be owned and run by the one person whose work it sells. HMRC uses the phrase in the off-payroll rules to describe a worker's "own intermediary", noting that a worker who supplies services this way is "usually" doing so through a personal service company (gov.uk, off-payroll page last updated 26 February 2026).
That makes a PSC a business vehicle, not a status. Contracting through a company is a legitimate way to run an independent practice: it separates the business from you personally, it's how many clients prefer to engage suppliers, and it sits at the centre of how the off-payroll rules are drafted. Whether a PSC is the right structure for you — as opposed to operating as a sole trader — is a separate business and tax decision, turning on liability, administration and how you want to be paid, that we cover elsewhere; here we look only at how a company you already contract through interacts with IR35.
How does a PSC work with IR35 / the off-payroll rules?
The off-payroll working rules (IR35) exist precisely because a company can sit between a worker and a client. Rather than stopping at the company, the rules look through the PSC to the real working relationship and ask a single question: if you had provided your services directly to the client, without the company in the middle, would you have been an employee? (gov.uk). If the honest answer is yes, the engagement is treated as "inside" IR35 and taxed broadly like employment; if no, it's "outside". Crucially, the company's existence doesn't answer that question — the arrangement does.
What settles it is the same set of factors the courts and HMRC weigh: control (how, when and where the work is done), personal service and the right of substitution (whether you must do the work yourself or could send a genuine substitute), and mutuality of obligation (an ongoing duty to offer and accept work) — alongside financial risk, equipment and how far you're integrated into the client's organisation. No single factor is decisive; it's the whole picture. HMRC's free Check Employment Status for Tax (CEST) tool is built to run exactly this assessment against a real arrangement — we walk through the CEST tool and what it weighs in a separate post. The point to hold onto is simple: the PSC is the wrapper, and IR35 is about what's genuinely inside it.
If you run a PSC and want the contracting standards and frameworks that help a genuine independent business stand up to scrutiny, membership is where that structure lives.
Who decides your IR35 status when you work through a PSC?
One of the biggest surprises for contractors is that, when you work through a PSC, you often don't decide your own IR35 status. Who is responsible depends on the type of client you're working for (gov.uk). For public-sector clients, and medium or large private-sector clients, the client makes the determination and must issue a Status Determination Statement (SDS) — a written decision that sets out the outcome and the reasons for it, passed down the contractual chain. These rules took effect for the public sector from April 2017 and for the private sector from April 2021. For small private-sector clients, the responsibility stays where it was before the reforms: with your own intermediary — your PSC. The table below summarises the split.
| Client type | Who decides your status | SDS required? |
|---|---|---|
| Public-sector client | The client | Yes — since April 2017 |
| Medium or large private-sector client | The client | Yes — since April 2021 |
| Small private-sector client | Your own PSC (intermediary) | No |
Whether a private-sector client counts as "small" is judged under the Companies Act size test, not a figure you can eyeball — the thresholds change and should be confirmed on gov.uk before you rely on them, which is why we've kept them out of this piece deliberately. The practical effect matters: a cautious medium or large client may default an engagement to "inside" to protect itself, even where the working reality points the other way. Understanding how the factors work — and reading an SDS critically — lets you have an evidenced, professional conversation rather than accept a blanket decision. It also sets up the related question of what inside versus outside IR35 actually means for your tax and take-home.
Membership gives you the B2B contract pack, substitution-network access and escalation support that help you evidence a genuine independent arrangement when a client is deciding your status.
Does having a PSC make you outside IR35?
No — and this is the single most important thing to understand about a personal service company. A PSC is a vehicle, not a status. Setting up a limited company, invoicing through it, or joining any membership body does not put you outside IR35, because none of those things changes the actual working relationship the rules examine. It is entirely possible to run a PSC and be inside IR35 on one engagement, and equally possible to be outside on another — the company is the same in both cases.
What supports an outside position is being genuinely in business on your own account: keeping real control over how you deliver, working to defined deliverables rather than an open-ended role, carrying your own financial risk and equipment, and — where it fits — holding a genuine right of substitution you could actually exercise. Those aren't box-ticking tricks; they're features of how a real one-person firm operates, and they're what HMRC and the courts look for behind the company. It's worth remembering, too, that a tax-status outcome is not your employment-law status: HMRC may regard someone as self-employed for tax even where their status in employment law is different (gov.uk).
This is the practical ground the IFA's standards and B2B contract framework are built on — helping members evidence that they operate as genuine independent businesses, with contracting standards and a substitution network behind the position rather than just words in a clause. To be completely clear, because it matters: IFA membership does not change your status, does not produce an "outside IR35" result, and cannot guarantee any CEST or IR35 outcome. Membership gives you frameworks, standards, support and access — not a status. What good structure does is help a genuine position hold up when it's checked.
Frequently asked questions
What is a personal service company? A personal service company (PSC) is a limited company that an individual sets up to provide their own professional services through, instead of invoicing clients directly or being on a payroll. It's an ordinary UK limited company owned and run by the one person whose work it sells. HMRC uses the term in the off-payroll rules to describe a worker's "own intermediary".
What is a PSC in IR35? In IR35, a PSC is the intermediary the rules are built around. The off-payroll rules apply where a worker provides services through their own intermediary, "usually a personal service company", and would have been an employee if they had provided those services directly to the client. The PSC is the company the rules look through to reach the real working arrangement.
What is the difference between a sole trader and a PSC? A PSC is a limited company you contract through — a separate legal entity that invoices the client. A sole trader isn't incorporated: in law, the individual and the business are the same. Both are legitimate ways to work independently, but the choice between them is a separate business and tax decision — about liability, administration and how you're paid — and it isn't what decides your IR35 status. The off-payroll rules bite on engagements run through an intermediary such as a PSC.
Does a personal service company make you outside IR35? No. A PSC is a business vehicle, not a status. Neither setting up a limited company nor joining a membership body changes the working relationship the rules examine, so it can't put you outside IR35 by itself. You can run a PSC and be inside IR35 on one engagement and outside on another; what supports an outside position is genuinely being in business on your own account — real control, financial risk, and a genuine right of substitution.
Who decides my IR35 status? It depends on the client. For public-sector clients and medium or large private-sector clients, the client decides and issues a Status Determination Statement (from April 2017 and April 2021 respectively). For small private-sector clients, your own PSC remains responsible for the decision. This is general information, not legal or tax advice; UK rules vary and change, so take professional advice on your own situation.
A personal service company is simply the company an independent professional contracts through — a normal, legitimate way to run a one-person firm in the UK. What it isn't is a shortcut around IR35. The off-payroll rules look through the company to the real relationship, the client makes the call and issues an SDS in most cases, and your status stands or falls on how you genuinely work. The useful work, then, isn't in the company structure itself but in operating as a real business: clear contracting, genuine control, and a substitution right you could actually use. That's the position the IFA helps members build and evidence — honestly, and without pretending it's a status fix.
If you're running a PSC and want the standards, contract pack and support that help a genuine independent business stand up to scrutiny, that's what membership is for.