UK Public Procurement Thresholds for SMEs

UK public procurement thresholds give SMEs a practical basis for deciding where to find contracts and how to compete for them. The 2026 figures turn that decision into a clear framework. A useful bidding strategy matches the threshold to the buyer and contract type, values the whole requirement including VAT, and searches both above and below the line.

Why the 2026 threshold update is the right moment for an SME to build a bidding strategy

The Procurement Act 2023 came into force in England, Wales and Northern Ireland on 24 February 2025. Procurements that started before that date still fall under the Public Contracts Regulations 2015, so value alone cannot show which rules apply. The commencement date is the first dividing line. For SMEs, that distinction prevents a current threshold figure from being applied to a procurement governed by an earlier regime.

The Procurement Act 2023 (Threshold Amounts) (Amendment) Regulations 2025 introduced the new figures from 1 January 2026. Procurement Policy Note 023 provides accompanying guidance. The figures run until 31 December 2027, with the next revision expected from 1 January 2028. They moved down. Slightly more contracts therefore fall under the full regulated regime, so the numbers below are a useful place to start when checking search filters.

The 2026 threshold table and what each row actually means

All the figures in the 2026 threshold schedule include VAT. A contract that appears below threshold at its net price can cross the line once VAT is added. Comparing an excluding-VAT bid price with an including-VAT threshold therefore gives the wrong answer before any question about procedure or publication arises.

For central government goods and services, the threshold is £135,018, covering departments, NHS trusts and NHS foundation trusts. For sub-central goods and services, it is £207,720, covering councils, police, fire, housing associations and universities. Buyer classification determines which row applies. The previous figures were £139,688 and £214,904 respectively for procurements commenced on or before 31 December 2025.

Works contracts have a threshold of £5,193,000 across authorities, down from £5,372,609. These include building, construction and civil engineering. A maintenance contract concerning a building is classified according to its main purpose. The same principle applies to mixed contracts combining goods and works, where choosing the wrong row can also produce the wrong search filter.

Light-touch services, including health, social care, education and certain other specified services, have a threshold of £663,540. Utilities goods and services have a threshold of £415,440, while utilities works use £5,193,000. Utilities light-touch services have a separate, higher figure.

The figures fell because of currency conversion, with no change in policy. The UK's commitments under the WTO Government Procurement Agreement set the basis for thresholds, which are converted from Special Drawing Rights into sterling every two years. Exchange-rate movement changed the sterling amounts. That mechanism explains the current revision but does not establish the direction of the next one.

How the threshold determines which publication platform an SME needs to watch

Above-threshold opportunities are listed on the central digital platform, or CDP, and Find a Tender. Below-threshold work requires a wider search. Contracts Finder and local council portals form part of that search, but being below the main threshold does not mean an opportunity falls outside publication requirements. Those requirements begin at much lower values and depend on how the buyer approaches the market.

For central government, including NHS trusts, £12,000 including VAT triggers a mandatory below-threshold tender notice on the CDP when the authority chooses to advertise openly. That notice must precede publication elsewhere. The obligation does not apply when the authority invites only a closed group of pre-selected suppliers without advertising. Other authorities have a higher trigger point, while smaller purchases may go directly to known suppliers for quotes.

Scotland requires a separate reading of the rules. The Procurement Reform (Scotland) Act 2014 regulates goods and services from a lower value excluding VAT, with a substantially higher excluding-VAT threshold for works. Contracts at or above those levels must be published on Public Contracts Scotland, and those above the higher thresholds set in line with an international procurement agreement must also be published on Find a Tender. The Scottish Government announced in November 2026 that the lower thresholds would increase from 1 April 2027, subject to parliamentary approval. Wales also sets its own figures for devolved Welsh public bodies.

The software SME example illustrates how classification and search errors compound. The business filtered only Find a Tender notices above a chosen value and missed a sub-central open competition that matched its services but sat below the sub-central threshold. Its VAT-inclusive misclassification placed the opportunity outside both its platform search and its value band. The failure was a search built around the wrong boundary.

What actually changes when a contract crosses the threshold: process, timescales, and transparency rights

Above-threshold procurement imposes structured obligations on buyers under the Act. A tender notice must be published on the CDP before the process opens, and the buyer must follow and document an open competition or competitive flexible procedure. Evaluation criteria and weightings must be published before bidding begins. That formality gives a first-time bidder a defined basis for preparing its response rather than guessing which features the buyer will reward.

A bidder that loses receives an assessment summary, and the standstill is part of the procedure that protects bidders at award. Together with published criteria, they make the buyer's decision more accountable and give an SME a basis for understanding the result.

Below threshold, the procedure is less uniform. Buyers follow their own standing orders and financial regulations, which commonly move from a single quote or waiver for very small purchases to written quotes and more structured mini-competitions as value increases. These arrangements are not legally standardised across buyers. A simpler process may therefore be faster, but it can depend more heavily on the supplier already being known to the authority.

Payment protections apply on both sides of the threshold. The 30-day payment obligation also covers subcontractors throughout the supply chain, and buyers must publish data on whether they pay on time. Prime contractors that persistently pay subcontractors late can be excluded from future procurement. This provides a practical benefit without removing the need to distinguish between the two procedural routes.

The below-threshold market is larger by volume than the above-threshold market, and most SMEs ignore it

The prominence of regulated tenders can make above-threshold procurement appear to be the main market. By contract count, the reverse is true. Most public contracts sit below the statutory thresholds, and the median UK public contract is well below the main goods and services thresholds for both central and sub-central buyers. An SME searching only above the line is therefore watching the smaller share of opportunities by volume.

A council may spend little on cleaning each year, but the value of a four-year contract must cover the full term, including extensions. That total can cross the sub-central threshold.

Below-threshold work is also not uncontested work. Buyers still need quotes or mini-competitions under their financial regulations, and many choose to advertise purchases below the statutory publication triggers. However, advertised below-threshold competitions in England cannot use a separate selection questionnaire to shortlist suppliers, except for larger works contracts. Removing that early step makes it easier for smaller firms that it used to keep out to compete.

Local government is particularly relevant to this strategy. It has the highest proportion of public spend going directly to SMEs, while defence and aerospace have the lowest SME share at a small fraction. A 2026 order on local government procurement in England also enables local authorities to reserve certain below-threshold contracts for suppliers within their area. For many small businesses, these features make local authority work a more accessible starting point than a search confined to large regulated tenders.

How the PA23 evaluation rules change what a competitive bid actually looks like

Finding an appropriate contract is only the first filter. To win it, a bid must follow the published evaluation model. The Act's move from Most Economically Advantageous Tender, or MEAT, to Most Advantageous Tender, or MAT, makes clear that competition need not centre on price. Authorities can give more weight to public good outcomes, environmental impact, supply-chain resilience and community benefit.

Those criteria are not unrestricted preferences. The Act requires them to relate to the subject-matter of the contract and to be proportionate, clear and measurable. An SME's local knowledge or ties to its community can therefore help it compete when they support the outcomes the buyer is assessing. A general claim to be local is not the same as a response that addresses a published requirement.

Price can still account for a substantial minority of the total score. A stronger quality and social value response can nevertheless outweigh a cheaper offer in the overall evaluation. SMEs can draw on authentic community relationships and supply-chain agility where those features fit the contract. The practical implication is to develop those responses with the same care as pricing.

Procurement Policy Note 002 sets the lowest social value weighting that UK central government tenders can use. The Public Services (Social Value) Act 2012 requires consideration of social value but does not itself prescribe a minimum weighting, while most councils and NHS trusts match or exceed the central government weighting. Procurement Policy Note 026, published on 5 August 2026, introduces a new Social Value Model from 1 January 2027, focused on good jobs and skills. It raises the minimum weighting for larger contracts above a specified VAT-inclusive value. The government noted that these higher requirements do not typically apply to the contracts smaller firms pursue.

The Selection Questionnaire is generally a pass/fail gate covering financial standing, insurance, certifications, modern slavery and equal opportunities, while the invitation to tender scores method statements, social value, pricing and technical responses against published weightings. Proportionality also has legal weight under the Act. Buyers cannot impose disproportionate turnover demands for small contracts, and insurance requirements must reflect the actual contractual risk rather than exclude smaller suppliers through excessive conditions.

Turning the threshold table into a practical bidding filter for your business

Identify the buyer type and the contract's main purpose, then compare the appropriate threshold with the full-term value, including VAT and all extension options. For maintenance or mixed contracts, check whether the main-purpose classification calls for the works threshold. Dates need their own check. Procurements commenced before 24 February 2025 fall under the earlier rules and those commenced from that date fall under the Act, with the new threshold figures applying to procurements commenced from 1 January 2026. Search both above- and below-threshold channels, including Public Contracts Scotland where the lower Scottish regulated-procurement thresholds apply, and keep up ties with local buyers as another way to find smaller purchases. These checks are most useful when applied consistently to individual bids. Jonty's Scout tier finds live tenders across Find a Tender, Contracts Finder, Public Contracts Scotland and TED and applies these filters automatically, so there is less need to keep separate portals and threshold tables up to date. Its paid Bid Manager tier writes and submits bids once a suitable opportunity has been found. A concrete next step is to update the business's saved searches using the 2026 classifications and full-contract values, then set a calendar reminder for the next biennial revision on 1 January 2028.