Personal service companies


Personal service companies (PSC) were originally intended to enable genuine freelancers and the self-employed to go into business with limited business risk. However, there is evidence that an increasing number of people, including some low-paid workers, now have no choice but to contract for work through a PSC. 


A PSC is a limited company with just one shareholder/director. The individual concerned contracts with the organisation to which they provide services via the PSC, never directly. Using a PSC enables that organisation to avoid employment responsibilities including national insurance, PAYE and all statutory employment rights, such as the national minimum wage, and holiday pay. When used legitimately, the individual benefits from flexibility and tax efficiency. 


It is worth noting that someone who chooses to contract through a PSC may now have some limited protection under the employment provisions of the Equality Act 2010, following a new case, EAD Solicitors LLP v Abrams [2015] UKEAT 0054/15/0506. See page 203 of Chapter 7 — Discrimination.