In answer to your question, yes it is. Skydiving is exempt from being classed as a public transport flight under the ANO, and PPL's are allowed to act as PIC for skydiving purposes.
As you correctly assume, you cannot collect any kind of payment for your services, and would only be able to do so if you had a CPL.
A lot of Skydive ops insist you have an IMC rating too. Not just for the obvious, but if required to operate into controlled airspace to drop, the CAA will issue a letter of understanding that is predicated on the PIC holding at least this.
Skydive work is quite demanding and not to be under-estimated. Accurate flying is required with heavy loads, and the pitch changes as people hurl themselves out the back can be very significant. Certainly keeps you on your toes on the trim wheel!!!