UK Government Procurement Act 2023 Threshold Changes Explained
UK Government Procurement Act 2023 Threshold Changes Explained
Why the Procurement Act 2023 threshold changes matter
Why the Procurement Act 2023 threshold changes matter
At first glance, the Procurement Act 2023 threshold changes look like a technical adjustment, minor updates to financial limits that determine when procurement rules apply. But they have far wider implications.
Thresholds sit at the heart of public procurement. They determine when a contract becomes subject to the full regulatory framework, when transparency requirements apply, and when suppliers must compete through formal processes. Even small changes can shift large volumes of public spending into, or out of, scope.
With the latest updates in force since 1 January 2026, the impact is not theoretical. It directly affects how contracting authorities run procurements and how suppliers access opportunities.
Understanding these threshold changes is therefore not just a compliance exercise. It is essential for understanding how the UK public procurement market is evolving under the Procurement Act 2023.
What are procurement thresholds under the Procurement Act 2023?
To understand the changes, it helps to start with the basics.
Under the Procurement Act 2023, thresholds are financial limits that determine whether a contract is subject to the full procurement regime. If a contract’s estimated value exceeds the relevant threshold (including VAT), contracting authorities must follow the Act’s requirements for transparency, competition, and process.
If the value falls below those thresholds, a lighter-touch set of rules applies, although some transparency obligations may still remain.
These thresholds are not arbitrary. They are set in line with international commitments, particularly the World Trade Organisation’s Government Procurement Agreement (GPA), and are reviewed regularly to reflect currency movements and economic conditions.
In practical terms, thresholds act as the dividing line between:
- “Above-threshold” contracts, which must follow the full Procurement Act 2023 regime
- “Below-threshold” contracts, which are subject to simpler, more flexible requirements
That dividing line is what has now shifted.
The key Procurement Act 2023 threshold changes (2026 update)
Since 1 January 2026, the new threshold values have applied to procurements across the UK. These were introduced through the Procurement Act 2023 (Threshold Amounts) (Amendment) Regulations 2025 and apply to any procurement that begins on or after that date.
The most important point is not just the numbers themselves, but the direction of travel.
Most thresholds have decreased slightly, meaning that more contracts will now fall within the scope of the Act.
The headline figures are:
- Central government – goods and services: £135,018
- Sub-central authorities (e.g. local government, NHS) – goods and services: £207,720
- Works contracts (all authorities): £5,193,000
- Light touch services (e.g. certain health and social services): £663,540 (unchanged)
These figures are inclusive of VAT and apply across most public sector procurement activity.
At a glance, the changes may appear marginal. In practice, they are not.
Even a small reduction in thresholds can bring a significant number of additional contracts into the regulated regime, particularly in sectors where contract values often sit close to the threshold boundary.
Why thresholds have changed
The adjustment of procurement thresholds is not unique to the Procurement Act 2023. It is part of a regular review cycle.
Thresholds are typically updated every two years to reflect:
- Currency fluctuations
- Inflation and economic conditions
- International obligations under agreements such as the GPA
What makes the 2026 update notable is the direction of change.
Historically, thresholds have often increased over time. In this instance, many have reduced slightly due to exchange rate movements, which has the effect of widening the scope of regulated procurement.
In simple terms, more contracts now cross the line into “above-threshold” territory.
What the threshold changes mean in practice
The practical implications of the Procurement Act 2023 threshold changes are best understood in terms of scope.
Because thresholds determine when the full regime applies, lowering them increases the number of contracts that must follow formal procurement procedures.
This has several consequences.
More contracts captured by the Act
More contracts captured by the Act
With thresholds reduced, contracts that might previously have been treated as below-threshold may now fall within the regulated regime.
That means:
- More procurements requiring formal notices
- Greater transparency obligations
- Increased competition requirements
For contracting authorities, this translates into a higher administrative burden. For suppliers, it creates greater visibility of opportunities.
Greater transparency across the market
Greater transparency across the market
One of the core aims of the Procurement Act 2023 is to increase transparency.
By bringing more contracts into scope, the threshold changes support that objective. A larger proportion of public spending is now subject to publication requirements, including notices at different stages of the procurement lifecycle.
This has a cumulative effect.
Over time, it increases the volume of available procurement data, making it easier to track activity across sectors such as healthcare, infrastructure, and local government.
A shift in how opportunities emerge
A shift in how opportunities emerge
Thresholds do more than determine compliance, they shape how opportunities appear in the market.
Above-threshold contracts must typically be advertised and competed openly. Below-threshold contracts, while still governed by principles of fairness and value, may involve more discretion and less formal process.
By lowering thresholds, the Procurement Act 2023 shifts more opportunities into the “visible” category.
For suppliers, particularly those seeking to enter public sector markets, this increases access.
The difference between above-threshold and below-threshold contracts
To fully understand the impact of the threshold changes, it’s important to distinguish between the two regimes.
An above-threshold contract is one whose estimated value meets or exceeds the relevant financial limit. These contracts must comply with the full requirements of the Procurement Act 2023, including transparency notices, defined procedures, and evaluation rules.
A below-threshold contract, by contrast, is subject to a lighter-touch regime. While still governed by principles such as fairness and non-discrimination, it allows greater flexibility in how procurements are conducted.
The threshold changes effectively redraw the boundary between these two categories.
And that boundary matters, because it determines how much structure, scrutiny, and competition a procurement must involve.
What this means for contracting authorities
For contracting authorities, the threshold changes introduce both operational and strategic considerations.
At an operational level, there is a need to:
- Review procurement pipelines and upcoming projects
- Reassess contract values against the new thresholds
- Update internal policies, templates, and processes
Contracts that were previously below threshold may now require full compliance with the Procurement Act 2023, including additional notice publication and procedural steps.
At a strategic level, the changes reinforce a broader shift.
Procurement is becoming more transparent, more structured, and more closely scrutinised. The threshold changes accelerate that trend by expanding the scope of regulated activity.
What this means for suppliers
For suppliers, the Procurement Act 2023 threshold changes create a different set of dynamics.
Not all contracts will fall above the threshold. But where they do, they bring greater structure, transparency, and reach.
On the positive side, this means:
- Increased visibility of opportunities
- Clearer access to formal, regulated procurement processes
- A more level playing field across sectors
However, this shift also brings greater competition. As more opportunities are formally advertised, the pool of potential bidders expands. Suppliers are no longer just competing within known networks, they are competing in an open market.
Success, therefore, depends not just on identifying opportunities, but on responding effectively within a structured process.
In this context, timing becomes critical. Suppliers who can identify opportunities early, before they reach the formal tender stage, are better positioned to engage, shape requirements, and compete effectively.
Why data matters more after the threshold changes
One of the less obvious consequences of the Procurement Act 2023 threshold changes is the increasing importance of data.
As more contracts fall within the regulated regime, the volume of procurement data grows. More notices are published. More contracts are visible. More performance information becomes available.
This creates a richer dataset, but also a more complex one.
Understanding how thresholds affect the market requires the ability to:
- Track which contracts fall above or below threshold
- Analyse changes in procurement activity over time
- Identify patterns across sectors and organisations
In other words, the challenge shifts from access to interpretation.
The organisations that benefit most are not those with the most data, but those that can use it to understand how the market is moving.
Are the threshold changes as a signal of a broader shift?
The Procurement Act 2023 threshold changes are, on the surface, a technical adjustment. But they point to something larger.
By lowering thresholds and bringing more contracts into scope, the UK government is reinforcing a shift towards greater transparency, consistency, and accountability in public procurement.
For contracting authorities, this means more structured processes and increased scrutiny. For suppliers, it means greater access, but also greater competition. And for both, it means that understanding the rules is no longer enough.
The real advantage lies in understanding how those rules shape the market, and how that market is evolving over time.
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