Who uses personal service companies?

A 2014 House of Lords Select Committee inquiry discovered uncertainty as to the extent of use of PSCs in the UK. As always, some workers, generally those in higher paid occupations, use a PSC out of choice because of perceived advantages, such as increased freedom to contract and perceived tax savings. However, the committee heard evidence that PSCs are not limited to the higher paid, and that instead, receptionists, office workers, credit controllers, healthcare workers, telephonists, cleaners and careworkers have all been asked to contract in this way. In particular, HMRC has identified significant abuse of PSCs in the lowest paid sectors, such as hospitality. It says there is evidence of people being “pushed” into their use, more by agencies than by hirers. Many low paid workers do not understand that a PSC is being used, or who their employer is. Payslips are often complex and difficult to follow.

This increased use of PSCs in the economy is linked to the rise in the number of freelancers and self-employed workers in the economy since 2010 (see Chapter 1).

In the public sector, there is some evidence of use of PSCs among social workers, the NHS and local authorities. However, statistics on the use of off-payroll arrangements in the public sector are unreliable, because the most recent Treasury Review, conducted in 2012, only collected information about workers who earned over £58,200 a year.

www.parliament.uk/business/committees/committees-a-z/lords-select/personal-service-companies/