Navigating the updated procurement thresholds

From 1 January 2026, significant changes to UK public procurement thresholds will come into force under the Procurement Act 2023 (Threshold Amounts) (Amendment) Regulations 2025. These updates, reviewed biennially to align with international obligations and currency fluctuations, will impact contracting authorities and suppliers across the public sector. Our procurement specialists are ready to guide clients through these changes, ensuring compliance and strategic advantage. 

What’s changing? 

The revised thresholds, applicable to procurements commencing on or after 1 January 2026, are inclusive of VAT and slightly lower than previous figures, meaning more contracts will fall within the regulated regime. Key updates include:

Contract type	Current threshold  (2024–25)	New threshold (2026–27)
Central Government – services & supplies	£139,688	£135,018
Sub-Central Authorities – services & supplies	£214,904	£207,720
Utilities – services & supplies	£429,809	£415,440
Works & concessions	£5,372,609	£5,193,000
Light touch regime	£663,540	Unchanged

These adjustments reflect the UK’s commitment to the WTO Government Procurement Agreement (GPA) and aim to maintain transparency and fair competition.

Implications for contracting authorities and suppliers 

Lower thresholds mean: 

• Increased compliance obligations: More procurements will require adherence to the full regime, including transparency and competitive tendering
• Greater competition: Smaller contracts now crossing thresholds will attract wider bidder interest
• Strategic planning essential: Authorities must review pipelines and ensure procurement strategies align with the updated rules

For suppliers, understanding these changes is critical to bid planning and compliance risk management.

Our expertise in procurement law 

We combine deep sector knowledge with practical solutions to help clients navigate complex procurement frameworks. Our services include: 

• Threshold compliance advice: Assessing whether contracts fall within the new regime
• Designing compliant tender processes: From open procedures to competitive flexible approaches
• Risk mitigation and dispute resolution: Supporting challenges and defending procurement decisions
• Training and horizon scanning: Preparing in-house teams for regulatory changes and best practice

Our team acts for both public authorities and private sector bidders, offering strategic guidance that balances legal compliance with commercial objectives. 

Key considerations for 2026 and beyond 

• Inclusive VAT calculation: Ensure contract valuations account for VAT
• Transitional provisions: Procurements commenced before 1 January 2026 remain under previous thresholds
• Sector-specific regimes: Healthcare services continue under the Provider Selection Regime, unaffected by these changes 

Practical steps for compliance

With the new thresholds effective from 1 January 2026, contracting authorities and suppliers should take proactive measures to ensure compliance and avoid procurement challenges. Here are key actions to consider:

For contracting authorities

• Review procurement pipelines
  Audit upcoming projects to identify contracts that now fall within the regulated regime due to lower thresholds
• Update internal policies and templates
  Revise procurement documentation, including tender templates and evaluation criteria, to reflect the new threshold values and VAT-inclusive calculations
• Train procurement team
  Provide targeted training on the updated rules, including the implications for competitive tendering and transparency requirements
• Plan for transitional provisions
  Confirm which procurements will remain under previous thresholds and document decisions to avoid disputes
• Strengthen governance and audit trails
  Ensure robust record-keeping to demonstrate compliance with the Procurement Act 2023 and associated regulations

For suppliers

• Reassess bid strategies
  Identify opportunities where contracts previously below threshold now require formal tendering, and prepare to compete
• Update compliance processes
  Align internal systems with new requirements, including VAT-inclusive     pricing and documentation standards
• Engage early with contracting authorities
  Build relationships and monitor procurement portals for increased tender activity in your sector
• Invest in training and resources
  Equip bid teams with knowledge of the updated thresholds and procedural changes to maintain competitiveness

How Freeths can help

Whether you are a contracting authority seeking clarity on obligations or a supplier aiming to optimise bid strategies, our procurement specialists provide tailored advice to keep you compliant and competitive. Contact us to discuss how these changes affect your organisation and to access our full suite of legal services.