UK procurement: thresholds and valuation Q&A

Question 1

What are the ordinary Procurement Act goods and services thresholds for 2026 and 2027?

Accepted Answer

For procurements commencing from 1 January 2026, the ordinary goods and services thresholds are £135,018 for central government authorities and £207,720 for sub-central government authorities, including VAT.

These figures apply where a different contract category does not take precedence.

They are not universal thresholds for works, utilities, defence, concessions or light touch services.

Confirm the authority classification, contract category and commencement date before using either figure to decide the procurement route.

Question 2

What is the ordinary UK works threshold from 1 January 2026?

Accepted Answer

The ordinary works threshold under the Procurement Act is £5,193,000 including VAT for procurements commencing from 1 January 2026.

Works have a different threshold from ordinary supplies and services.

A contract containing several elements also requires correct classification under the mixed-procurement rules.

Compare the relevant estimated total value with the applicable threshold; looking only at the first year, one invoice or one part of an aggregated project can produce the wrong result.

Question 3

What is the 2026 utilities goods and services threshold?

Accepted Answer

The Procurement Act threshold for an ordinary utilities contract that is not a works, defence and security or light touch contract is £415,440 including VAT from 1 January 2026.

Utilities works generally use the £5,193,000 threshold.

The term utilities has a specific legal scope, so supplying equipment to an organisation with a utility-related name is not enough to establish the route.

Confirm the activity, contracting entity and relevant category in the procurement documents.

Question 4

Do procurement threshold calculations include VAT?

Accepted Answer

The Procurement Act thresholds use estimated contract values including VAT.

This is different from assuming that every procurement document or advertised commercial figure is quoted on the same basis.

Check the value field and the applicable VAT treatment rather than mechanically adding a standard rate to every contract.

A threshold assessment and a supplier pricing schedule serve different purposes, so label both the tax basis and the time period clearly in working papers.

Question 5

Should extension options be included when estimating procurement value?

Accepted Answer

The valuation rules require consideration of the maximum amount that could be payable under the contract, including relevant options and extensions.

Looking only at the initial guaranteed period can understate the procurement value.

For a bidder, the same distinction matters commercially: a headline maximum value may include optional years that the buyer never exercises.

Record the estimated maximum, initial commitment and optional element separately when deciding whether the opportunity is worth pursuing.

Question 6

Can a buyer split one requirement into smaller contracts solely to avoid procurement rules?

Accepted Answer

No. The Procurement Act valuation rules include an anti-avoidance mechanism and require requirements that can reasonably be aggregated to be considered together unless there are good reasons not to do so.

Legitimate operational or commercial reasons for separate contracts can exist, but avoiding the applicable threshold is not a good reason.

Suppliers should distinguish lawful lotting, which can improve access, from artificial disaggregation intended to escape the procurement obligations.

Question 7

What is the ordinary light touch services threshold under the Procurement Act?

Accepted Answer

For light touch contracts outside the separate utilities and concession categories, the published threshold is £663,540 including VAT.

Light touch status depends on the services specified in the applicable regulations; it is not a discretionary label for any small or simple procurement.

Utilities light touch contracts and light touch concessions have different published figures.

Confirm the classification before applying the threshold, and retain the source and effective period with any figure copied into a bid checklist.

Question 8

Do the 2026 threshold changes retrospectively alter procurements that started in 2025?

Accepted Answer

The 2026 threshold notice says the new amounts apply to procurements commencing on or after 1 January 2026 and do not affect procurements commenced before that date.

Commencement has a defined meaning and is not necessarily the date someone first discussed the purchase.

Check the relevant notice or invitation and the applicable transitional provision.

A bid team should not substitute a newer threshold into a historical procurement simply because evaluation or award takes place later.

Question 9

Why can two official procurement thresholds differ without either being wrong?

Accepted Answer

They may concern different authorities, contract categories, legal regimes, periods or VAT bases.

A central government supplies threshold cannot be compared directly with a works threshold or a Scottish domestic threshold quoted excluding VAT.

Before treating the difference as an error, align those five features.

When maintaining a public FAQ, show the category and effective dates next to the number so a reader cannot easily mistake a specialised figure for a universal rule.

UK procurement: thresholds and valuation Q&A

What are the ordinary Procurement Act goods and services thresholds for 2026 and 2027?＋

What is the ordinary UK works threshold from 1 January 2026?＋

What is the 2026 utilities goods and services threshold?＋

Do procurement threshold calculations include VAT?＋

Should extension options be included when estimating procurement value?＋

Can a buyer split one requirement into smaller contracts solely to avoid procurement rules?＋

What is the ordinary light touch services threshold under the Procurement Act?＋

Do the 2026 threshold changes retrospectively alter procurements that started in 2025?＋

Why can two official procurement thresholds differ without either being wrong?＋