UK Procurement Thresholds 2026: Complete Value Guide

Procurement thresholds determine which regulations apply to public sector contracts. Updated thresholds took effect on 1 January 2026 under the Procurement Act 2023, with most values decreasing compared to 2024. All thresholds are now calculated inclusive of VAT.

Current Threshold Values (from 1 January 2026)

These values apply to all procurements commencing on or after 1 January 2026. Procurements that began before 31 December 2025 remain subject to the previous thresholds.

Goods and Services

Works and Concessions

Defence and Security

Light-Touch Regime Services

Key Change: VAT Inclusion

Under the Procurement Act 2023, all threshold calculations must now include VAT. This is a significant change from the previous regime where VAT was excluded. In practice, this lowers the effective threshold, meaning more contracts now fall within the scope of formal regulated procurement.

Understanding Authority Types

Central Government

Includes government departments and their executive agencies, such as HMRC, DWP, and Ministry of Justice. These organisations face the lowest thresholds for goods and services.

Sub-Central Authorities

Includes local authorities (councils), NHS organisations, police and fire services, educational institutions, and arm's-length bodies. These have higher thresholds for goods and services.

Utilities

Organisations operating in water, energy, transport, or postal sectors. The Procurement Act 2023 brings utilities into the same regulatory framework with their own threshold tier.

What Thresholds Mean for Suppliers

Above-Threshold Contracts

Contracts above threshold values must be advertised on Find a Tender Service (FTS), follow formal competitive procedures under the Procurement Act 2023, observe minimum timescales for responses, and comply with standstill requirements before contract award.

Below-Threshold Contracts

Contracts below thresholds are still subject to transparency obligations, publication on Contracts Finder (for contracts over £12,000 for central government or £30,000 for sub-central authorities), and the contracting authority's own procurement policies.

Calculating Contract Value

General Rules

Contract value must reflect the total value over the full term including all extension options, all lots within a procurement exercise, and VAT (now included in threshold calculation).

Avoiding Artificial Splitting

Contracting authorities must not artificially divide contracts to avoid threshold requirements. Recurring requirements should be aggregated across the expected contract period.

Framework Values

Framework agreement values reflect total expected expenditure by all users over the framework term. This is particularly relevant for frameworks such as ESPO, CCS, and YPO where aggregate values can be substantial.

Light-Touch Regime Services

Certain service categories benefit from lighter regulation under the light-touch regime. These include health and social care services, educational services, hotel and restaurant services, certain legal services, and postal services.

Practical Guidance for Bid Writing

Understanding thresholds helps suppliers prioritise their bidding activity:

• Below threshold opportunities are often less competitive and may have simpler evaluation criteria, making them ideal entry points for SMEs. • Above threshold contracts require formal, structured responses. Professional bid writing support can significantly improve your scoring. • Framework access through bodies like ESPO, CCS, YPO, and NHS LPP provides a route to sustained above-threshold work without repeatedly competing for individual contracts.

TenderVera supports bids across all threshold levels, from sub-threshold local authority contracts to major framework applications. Start with a free Tender Compliance Check to assess your readiness.

Next Review Date

Thresholds are reviewed every two years under the UK's WTO Government Procurement Agreement (GPA) obligations. The next review is expected to take effect from January 2028.