If you're exploring contract work, you’ve likely come across two common ways to operate: via an umbrella company or through your own Personal Services Company (PSC). Both options have distinct advantages and considerations, depending on your circumstances, experience, and preferences.
At Evodia, we support contractors at every stage of their journey — whether you're new to contracting or an experienced professional looking to optimise your setup. Here's a breakdown of what you need to know.
What is an Umbrella Company?
An umbrella company acts as your employer while you work on a contract assignment. You become their employee and they handle your payroll, tax, National Insurance contributions, and statutory benefits (like sick pay and holiday pay).
Key Benefits:
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Simple and hassle-free – no need to manage a business
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Tax and NI are automatically deducted (PAYE)
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You receive employee benefits
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Ideal for short-term or first-time contractors
Considerations:
What is a Personal Services Company (PSC)?
A PSC is typically a limited company that you set up to provide your services to clients. You are both the director and employee of your company, and responsible for managing your accounts, tax, and compliance.
Key Benefits:
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Greater tax efficiency (when operating outside IR35)
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Full control over your finances and how you're paid
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Opportunity to build a long-term business
Considerations:
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You’ll need to manage accounts, VAT, and tax returns
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Subject to IR35 legislation — if caught inside IR35, your tax position may be the same as an umbrella arrangement, with additional admin
Which Option is Right for You?
| Feature |
Umbrella Company |
Personal Services Company (PSC) |
| Admin & Setup |
Low |
High |
| Tax Efficiency (Outside IR35) |
Lower |
Higher |
| IR35 Management |
Handled by umbrella |
Your responsibility |
| Suitability |
Short-term contracts, new contractors, inside IR35 |
Long-term contracting, experienced professionals, outside IR35 |
Our Support
Whether you choose an umbrella or PSC route, Evodia works with fully vetted and compliant payroll providers and can guide you through setup, contract management, and IR35 compliance. We’re here to help you make informed decisions that align with your goals.
Ready to Take the Next Step?
Register with us to access contract opportunities across the Defence, Aerospace, Security & Space sectors. Our team will support you throughout the process — from onboarding to payment.
register now
FAQs
Q: Can I switch from an umbrella company to a PSC later?
Yes, many contractors start with an umbrella and move to a PSC once they gain experience or find contracts outside IR35.
Q: How do I know if my contract falls inside IR35?
We’ll help you assess each role and advise on compliance. IR35 status is often determined by the end client. Visit our IR35 page for further information.
Q: Do I need an accountant for a PSC?
Yes, it’s strongly recommended to have an accountant experienced in contractor finances and IR35 legislation.