PLR was established by the Public Lending Right Act 1979 which gave British authors a legal right to receive payment for the free lending of their books by public libraries. Under the Act funding is provided by Central Government and payments are made to eligible authors in accordance with how often their books are lent out from a selected sample of UK public libraries. To qualify for payment authors must apply to the Registrar of PLR who is appointed by the government to maintain a register of eligible authors and books, and to supervise the administration of PLR. The Act established PLR as an intellectual property right, entirely separate from copyright.

Having thus established the principles of PLR in the primary legislation, the Government then got to work on the PLR Scheme which passed through Parliament in 1982. The Scheme sets out more detailed rules for the operation of PLR in the UK such as which authors and books are eligible, how many libraries should be included in the sample providing loans data to the Registrar, and how the amount payable each year to authors should be calculated.

The Registrar is responsible to the Secretary of State for Culture, Media and Sport for the administration of PLR and the Scheme is funded through this department. The Registrar's office is based in Stockton-on-Tees and he is assisted by a team of 12 staff, providing Author Services and Corporate Services. The Registrar is advised by a Management Board appointed by the Registrar to advise him on the operation and future development of PLR. The Board consists of an author, a librarian, a publishing specialist and a member with experience of managing a government-funded body.