New UK Public Procurement thresholds from 1st January 2026

Coming approximately a month after the European Commission issued its annual Delegated Regulations updating public contract thresholds, the UK, for the first time under the Procurement Act 2023, will introduce new public procurement thresholds applicable to UK public procurements.[1] The regular update of thresholds is intended to better reflect currency and price fluctuations and maintain compliance with the World Trade Organisation’s Agreement on Government Procurement (GPA). 

Effective 1 January 2026, thresholds for almost all contract types have been decreased, only light touch regime contracts and contracts regulated by Welsh ministers (which will be updated separately) have remained static. In combination with the general inflationary trends experienced over the last few years, this will mean more contracts will fall within scope of the main provisions of the procurement rules applicable to each contract.   

The current thresholds (see below) remain effective for procurements started on or before 31 December 2025.

Importantly, contracting authorities should remember that public procurement thresholds are inclusive of VAT, and authorities must estimate the value of a contract in accordance with Schedule 3 of the Procurement Act 2023. Schedule 3 includes various rules, but in essence the estimated contract value should be the maximum amount an authority could expect to pay under the contract (e.g., including any extensions and/or electing to take up options to supply additional goods, services or works, etc.).

Different thresholds for contracts regulated by Welsh ministers

Please note that these new thresholds will not apply to contracts regulated by Welsh ministers. Welsh Ministers are making a separate statutory instrument to update the thresholds as they apply to those contracts.

When is the next revision expected?

As a result of the UK’s obligations under the WTO’s GPA, the next expected revision will be in a further two years’ time.

Actions for Procurement Teams

Whilst on the surface the decrease in thresholds may appear minimal, contracting authorities should assess how this affects their pipeline and consider: 

• assessing whether any below-threshold contracts routinely procured are likely to fall within the scope of the Procurement Act 2023 as a result of these changes;
• reviewing existing contracts where likely modifications will increase the contract value, as the new thresholds will likely create more “convertible” contracts;
• updating their internal procurement guidelines and financial thresholds to reflect these new values;
• updating relevant template documents and tools (e.g. contract value calculators, template PSQs, and/or template notices); and
• briefing teams on the new values – in particular due to the reduction in the thresholds.

If you have questions, please contact Laura Thornton.