New public procurement thresholds from 1 January 2026
The public procurement thresholds that apply to the Procurement Act 2023 will changing from 1 January 2026.
Why are the thresholds changing?
The Procurement Act 2023 (Threshold Amounts) (Amendment) Regulations 2025 (“the Regulations”), introduce new public procurement thresholds for procurements which are commenced on or after 1 January 2026.
Such thresholds are reviewed biennially in line with inflation and international commitments, including the World Trade Organisation Government Procurement Agreement. Historically, the thresholds have increased as a result of such reviews. However, due to currency fluctuations since the last update in 2024, nearly all thresholds will decrease slightly. The only thresholds that will not reduce and will remain the same are those which apply to light touch contracts.
Thresholds
The thresholds applicable to procurements which commence on or after 1 January 2026 are outlined below (which are inclusive of VAT):
| Type of contract | Current threshold (inclusive of VAT) | Threshold from 1 January 2026 (inclusive of VAT |
|---|---|---|
| GOODS AND/OR SERVICES | ||
| Central government body | £139,688 | £135,018 ↓ |
| Sub-central government body | £214,904 | £207,720 ↓ |
| WORKS CONTRACTS | ||
| Works contracts | £5,372,609 | £5,193,000 ↓ |
| LIGHT TOUCH CONTRACTS | ||
| Concession contract | £5,372,609 | £5,372,609 → |
| Other light touch contracts | £663,540 | £663,540 → |
| CONCESSION CONTRACTS | ||
| Concession contracts | £5,372,609 | £5,193,000 ↓ |
| UTILITIES CONTRACTS | ||
| Works utilities contracts | £5,372,609 | £5,193,000 ↓ |
| Light touch utilities contracts | £884,720 | £884,720 → |
| Other utilities contracts | £429,809 | £415,440 ↓ |
| DEFENCE AND SECURITY | ||
| Works contracts | £5,372,609 | £5,193,000 ↓ |
| Concession contracts | £5,372,609 | £5,193,000 ↓ |
| Other defence and security contracts | £429,809 | £415,440 ↓ |
Please note that the current thresholds remain effective for procurements commenced on or before 31 December 2025.
A procurement will be deemed to have commenced on or before 31 December 2025 if a contracting authority has completed any of the following steps on or before 31 December 2025:
- published a tender notice, transparency notice or below-threshold notice;
- invited submission of tenders in relation to a regulated below-threshold contract; or
- contacted a supplier in order to commence an award of a below-threshold contract.
Position in Wales
The notes to the Regulations confirm that:
“The amendments […] do not apply to contracts regulated by the Welsh Ministers. Welsh Ministers are making a separate statutory instrument to update the thresholds as they apply to those contracts.”
The Welsh Government retains responsibility for setting procurement thresholds in Wales.
As such, at least as things currently stand, the new thresholds outlined above will not apply to contracts awarded by devolved Welsh authorities (other than contracts awarded as part of a procurement under a reserved procurement arrangement), or contracts awarded by contracting authorities under a developed Welsh procurement arrangement and the current thresholds will continue to apply.
However, it is anticipated that the Welsh Ministers will introduce separate Welsh regulations shortly to harmonise the threshold (as is currently the case) – we will provide an update in due course.
Points to consider
Under the Regulations, most threshold amounts will reduce slightly, save for the light touch regime (which remains unchanged). As a result, more contracts are likely to fall within the purview of the Procurement Act 2023.
It is recommended that contracting authorities:
- Review and update internal policies and documentation
- Review procurement pipelines to identify any contracts that previously fell below the threshold but may exceed the lower thresholds and now be captured by the Act
- Ensure procurement and legal teams are aware of the updated thresholds
Additionally, where a below-threshold contract is to be modified and its value post-modification exceeds the now lower relevant threshold (a “convertible contract”), it will become a public contract caught by the provisions of the Procurement Act 2023 (and such modification only made in accordance with the requirements of the Act).
Contact us
If you have any questions about the new procurement thresholds or procurement law in general, please do not hesitate to contact us.
Tags: Procurement Act
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