A Personal Services Company (PSC) is a limited company through which an individual provides their own services to clients. The individual is the director and main shareholder of the company, and the company acts as the contractual vehicle through which the individual works.
The term ‘Personal Services Company’ does not appear in the IR35 legislation. Instead, the rules refer to arrangements involving an “intermediary” under the Income Tax (Earnings and Pensions) Act 2003.
PSC is commonly used as shorthand for the most typical intermediary structure affected by IR35: a contractor’s own limited company. However, IR35 can also apply where services are provided through other types of intermediary, such as partnerships or certain other company structures.
For most contractors, this means operating through their own company where they are the director and a shareholder. Even where there are other shareholders or directors, IR35 can still apply if the contractor has a material interest in the company (generally 5% or more ownership or control).
Contractors who work as sole traders, or who are employees of an umbrella company paid via PAYE, are not operating through a PSC.
You can read more about this in HMRC’s Employment Status Manual, particularly the sections covering Conditions A, B and C.