Starting from 1 January 2026, new threshold amounts set by the Procurement Act 2023 (Threshold Amounts) (Amendment) Regulations 2025 will take effect. These updates are significant as they influence whether your contract is subject to the Procurement Act 2023. It's important to note that most thresholds have been lowered, which means that a greater number of contracts will now be included under the Act.
Different thresholds for contracts regulated by Welsh ministers
Please be aware that these new thresholds will not be applicable to contracts overseen by Welsh ministers. Welsh Ministers are preparing a separate statutory instrument to revise the thresholds relevant to those contracts.
Why are thresholds changing?
The routine adjustment of thresholds aims to more accurately represent changes in currency and price fluctuations while ensuring compliance with the World Trade Organisation’s Agreement on Government Procurement. The next expected revision will be in a further two years’ time.
Action points
- Review your internal policies including contract standing orders, procurement templates and procurement tools to reflect the new figures from 1 January 2026.
- Evaluate any contracts that are below threshold which are now expected to be included under the Procurement Act 2023 due to these changes.
- Evaluate your existing contracts where potential modifications could increase the contract value, since the new thresholds are expected to create more "convertible" contracts.
- Check your project pipeline to see if upcoming projects are likely to exceed the new thresholds.
- Make sure procurement teams and internal stakeholders are all updated on the new thresholds.
Procurement thresholds (inclusive of VAT)
The current thresholds (see below) remain effective for procurements started on or before 31 December 2025.
| Type of Contract | Thresholds from 1 January 2026 (inclusive of VAT) | Current thresholds until 31 December 2025 (inclusive of VAT) |
|---|---|---|
| Goods and services to a central government authority | £135,018 | £139,688 |
| Goods and services to a sub-central government authority | £207,720 | £214,904 |
| Works contract | £5,193,000 | £5,372,609 |
| Concession contract (not a utilities contract) | £5,193,000 | £5,372,609 |
| Light Touch contract (that is not a concession contract or utilities contract) | £663,540 | £663,540 |
| Utilities contract (not light touch) | £415,440 | £429,809 |
| Utilities contract – light touch | £884,720 | £884,720 |
| Defence and security contract (that is not a works contract or concession contract) | £415,440 | £429,809 |
PPN023:2026 (Threshold Amounts) which also sets out the procurement thresholds may cause some confusion as it refers to works while quoting the lower supplies and services thresholds. Please note the lower threshold should only be used in the context of mixed contracts that contain some works elements.
Please do not hesitate to contact our expert local government solicitors, in relation to any procurement advice. Weightmans has a range of experience on procurement matters and we can support both public and private sector bodies and provide tailored advice for your specific procurement.
