UK procurement thresholds: when buyers must run a tender

It is 4pm, the contract extension needs signing, and somebody asks whether the new value means you now need to tender.

That question can stop a good team in its tracks. Get it wrong and the fallout lands on your timetable, your approval route and the paper trail you’ll need to defend the decision.

Get the value, contract type and start date right early. It saves a lot of uncomfortable conversations later.

What are UK procurement thresholds and when must buyers tender?

These thresholds are the contract values that trigger the Procurement Act 2023 regime for public contracts. Which one applies depends on your procurement regime, the type of contracting authority, and the contract category. From 1 January 2026, buyers use the new figures for any procurement starting on or after that date. This section covers that regime. Scotland runs its own rules, so check separately if that applies to you.

Crossing a threshold changes your process, but it doesn’t hand you a single fixed route. You’ll need to work out which lawful route applies, publish the right notices, and calculate the full anticipated value, VAT and extensions included.

Table of contents

• Why this matters before you publish
• The 2026 UK procurement thresholds
• When a buyer must run a tender
• How to calculate the contract value
• Which threshold applies when a procurement started in 2025
• Convertible contracts and contract modifications
• What changes for Welsh contracting authorities
• A practical procurement pipeline audit
• Common threshold mistakes to avoid

Why this matters before you publish

Threshold decisions rarely get made in calm conditions. They land when the service needs renewing, a supplier is chasing an answer, finance wants a figure, and delivery can’t afford to stop.

And that’s exactly the moment a tidy spreadsheet can hide a problem.

A contract that looks below threshold for its first year may be above threshold once options, inflation uplifts, variations and the whole term are counted. A below-threshold award can also become a regulated public contract after a later modification.

The threshold is a legal calculation, based on the full value of the contract opportunity, and treating it like a budget line is how buyers get caught out.

For suppliers, this matters too. A buyer’s route affects notice requirements, timescales, competition and how early you can spot work in the pipeline. A published opportunity may look like it appeared overnight. Usually, the thinking started much earlier.

The 2026 UK procurement thresholds

The current figures apply to procurements that commenced between 1 January 2026 and 31 December 2027. This table is a starting point, not a complete statement for every UK regime. Check the relevant regime, authority type, contract type and commencement date, including separate arrangements for Scotland and Welsh contracting authorities where applicable. The official PPN 023 threshold update, known as Procurement Policy Note 023, sets out the current threshold amounts.

The figures buyers need to know

All figures below are inclusive of VAT.

Contract type	Threshold from 1 January 2026
Central government goods and services	£135,018
Sub-central goods and services	£207,720
Works contracts	£5,193,000
Concession contracts	£5,193,000
Utilities goods and services	£415,440
Utilities works	£5,193,000
Defence and security goods and services	£415,440
Defence and security works	£5,193,000
General light touch contracts	£663,540
Light touch utilities contracts	£884,720
Light touch concession contracts	£5,372,609

The correct row depends on the buyer and the subject matter. A central government authority may use a different row from a sub-central government authority. The contract category also matters, including a works contract, concession contract, utilities contract, defence and security contract or light touch contracts.

Why some thresholds fell in 2026

These figures aren’t picked at random. They’re set by the UK’s obligations under the World Trade Organisation’s Government Procurement Agreement, recalculated against international currency values. That’s why the numbers can shift between periods, even when nothing about UK policy has changed.

That’s why several figures dropped from the previous period. Take it as a prompt to re-check any planned work that sits close to the line, not as a reason to relax.

The light touch thresholds did not reduce in the 2026 update. Don’t assume that makes every care, health or community service procurement simple. The scope, buyer, contract type and local rules still matter.

VAT and extensions count

Use the total amount payable under the contract. That includes VAT, the whole expected term, extension options, known renewals and payments to suppliers.

The Government’s threshold guidance makes the VAT point clear. A £120,000 annual service contract with a one-year extension is not a £120,000 decision if the buyer expects to use the option.

When a buyer must run a tender

Above threshold or not is only the first question. You also need to know what this contract actually is, who’s buying it, and which rules apply.

First establish whether the contract is in scope

Where a procurement is above the relevant threshold, the Procurement Act 2023 regime is engaged, subject to exclusions and any applicable exemption. The buyer then needs a lawful route to market and must meet the Act’s notice and process requirements.

That might mean a competitive tender, though not necessarily an open procedure. It could be an open procedure, a competitive flexible procedure, a framework, or a permitted direct award, and you need to pin down which one before the tender notice goes out. Knowing a good supplier already isn’t a route. The facts of the procurement decide that for you.

Below threshold still means a process

Below-threshold contracts still involve public spending. Buyers may have contract procedure rules, standing orders, quotation requirements, delegated limits and publication duties.

Contracting authorities may apply their own controls below the statutory threshold. A council might require three written quotations at a value far below £207,720. An NHS body may have its own internal approvals. Those local rules don’t disappear because a contract is under £207,720.

Suppliers shouldn’t dismiss lower-value opportunities either. They can be a sensible route into a buyer’s supply chain, especially where the work fits your evidence and delivery capacity.

How to calculate the contract value

A good value calculation is boring in the best possible way. It is written down, checked, and easy to explain six months later.

Count the full anticipated spend

Start with the estimated contract value, based on the maximum anticipated spend across the full contract period. Include fixed fees, variable spend, implementation, maintenance, extensions and options.

If the buyer is procuring a multi-lot arrangement, look at the likely aggregate value. Don’t split a requirement into tidy smaller pieces simply because the total figure creates a harder conversation. Auditors aren’t known for being impressed by creative arithmetic.

Use the right contract category

Goods and services use different thresholds from a works contract. Utilities and defence contracts have different figures, while light touch contracts have their own thresholds.

Get the classification wrong and the calculation can be perfectly neat but still legally incorrect. For a complex requirement, record why you chose the category. A short note now can save a long explanation later.

For organisations that bid regularly, this is also useful market intelligence. It helps you understand which opportunities are likely to be fully regulated and when a buyer may need to plan further ahead.

Which threshold applies when a procurement started in 2025?

The new thresholds apply to procurements commenced on or after 1 January 2026. Earlier procurements can remain under the previous threshold amounts if they genuinely commenced before the change.

What actually counts as commencement

A procurement does not start merely because someone added it to a pipeline, discussed it at a meeting or approved an outline business case.

The statutory starting steps matter. The 2025 procurement regulations identify inviting tenders for a regulated below-threshold contract as a possible point of commencement. Check the threshold amendment regulations and official guidance where the timing is close or the route is disputed.

Keep evidence with the procurement record

Record the date and nature of the action that began the procurement. Save the relevant notice, invitation, audit trail and approvals.

This is one of those areas where “we thought it started before Christmas” won’t carry much weight. If the contract value is close to a threshold, check the position against the relevant legislation before publishing, not after a supplier asks a difficult question.

Convertible contracts and contract modifications

Extensions and variations are where threshold issues often come back to bite. The original award may have been fine, but a later change may create the problem.

When a contract becomes convertible

A convertible contract starts life as a below-threshold contract, then crosses into public contract territory the moment a modification pushes its value above the relevant threshold.

At that point, the contract is treated as a public contract for the modification rules and relevant notice requirements. The original award does not automatically authorise every later change to a convertible contract.

The Government’s contract modification guidance explains the definition and process for a convertible contract.

Test the change before you sign it

For certain below-threshold modifications, the value increase must remain within 10% for goods or services, or 15% for works. These limits apply in the relevant circumstances, rather than giving automatic permission for every modification. The cumulative value of changes matters, and the modification must not materially change the contract’s scope.

Ask these questions before approving a variation:

• Does the original contract include a clear and usable review clause?
• What is the aggregate value of every change already agreed?
• Would the expanded scope have attracted different suppliers at the outset?
• Does the change alter the commercial balance or delivery model?
• Does the revised total cross the relevant threshold?

If the answer raises doubt, pause and get procurement or legal advice. A rushed variation can create more work than a properly planned competition.

What changes for Welsh contracting authorities

Don’t assume the England position applies word for word in Wales. Procurement Act rules cover England, Wales and Northern Ireland in many situations, but Welsh ministers have separate powers and arrangements.

Wales has its own threshold regulations

The Welsh threshold amendment regulations came into force at 12.05am on 1 January 2026. Welsh buyers should use current Welsh guidance alongside the legislation.

The GOV.WALES thresholds guidance is a sensible starting point, particularly where a contract may also involve Welsh social partnership duties or internal procedures.

Check the authority as well as the location

A supplier’s office address doesn’t decide the procurement regime. The authority, contract, funding context and commencement date determine the applicable route.

Scotland has its own procurement legislation and guidance. Northern Ireland can also have separate operational controls. If the contract is cross-border, funded through several bodies, or sits near a threshold, get clear on the applicable route before committing the team.

A practical procurement pipeline audit

A threshold review just needs one clear owner, not a three-day workshop or a wall of colour-coded spreadsheets.

Review planned procurements first

Start with contracts due to go live, renew or change in the next 12 months. Add one line per opportunity and capture the buyer type, category, total estimated value, VAT treatment, proposed term and extension options.

Then flag anything near a threshold. A contract £10,000 below the line may need extra attention if usage is uncertain or the service is likely to grow.

Give each contract a simple decision record

Use this checklist with your commercial, finance and operational leads:

• Confirm the authority type and the relevant contract category.
• Calculate the full maximum value, including VAT and every extension.
• Record the procurement commencement date and supporting evidence.
• Check internal contract procedure rules and approval levels.
• Identify whether modifications are planned or likely during delivery.
• Agree the procurement route before the market engagement or tender notice begins.
• Keep the decision record with the contract file.

For teams handling regular opportunities, bid governance support can help turn this into a repeatable process. That means fewer last-minute scrambles, clearer bid or no-bid decisions and less pressure landing on one person at 9pm.

Common threshold mistakes to avoid

The numbers are only part of the job. These are the mistakes that create avoidable risk.

• Calculating one year’s spend, then forgetting the extension sitting in the contract schedule.
• Treating an internal approval as proof that a procurement commenced before 1 January 2026.
• Assuming a below-threshold award can be expanded without testing the modification rules.
• Using a central government threshold for a council, NHS trust or university procurement.
• Treating local quotation rules as optional because the statutory threshold is higher.
• Waiting until the tender deadline to check the live notice, route and mandatory requirements.

The same discipline helps suppliers. Read the notice, specification, pricing schedule and terms before you celebrate the contract value. A large number on a portal is not automatically a good opportunity.

Frequently asked questions

Key takeaways

• Thresholds apply to the total anticipated value of the contract, VAT and extensions included.
• From 1 January 2026, central government goods and services contracts reach the main threshold at £135,018.
• Councils, NHS bodies and universities generally use the £207,720 goods and services threshold.
• Above threshold means you need a lawful, regulated route, which isn’t always an open tender.
• Contract modifications need their own review. A below-threshold award can become a convertible contract.
• Good records protect both the procurement decision and the people who made it.

Keep the decision clear before pressure takes over

Thresholds will never be exciting, but getting the calculation wrong after award is a special kind of headache nobody wants.

A clear process gives your team breathing room. It lets you plan the route, test the risk and put the right evidence in the file before deadlines get tight.

If your bid team needs stronger habits around qualification, writing and review, take a look at the Bid Win Rate Accelerator Training or a bid review retainer. Bringing someone else in isn’t a weakness, it protects your energy and your headspace when it matters most. Book a free fit call when you want a calm, honest conversation about what would help.