The Scottish Ministers have recently revised the public procurement thresholds for Scotland to ensure they are in line with the World Trade Organisation’s Government Procurement Agreement (“GPA”). The updated thresholds apply to procurement exercises which commence on or after 1st January 2026 and will remain applicable until 31st December 2027.
As with the last threshold revisions made for 2024 to 2025, where VAT may be payable under a contract, purchasers must ensure that an allowance for VAT is included within the estimated value of the contract when determining whether the value of a contract is above or below the new threshold values.
The Scottish Government suggest that unless purchasers can demonstrate that a lower (or no) rate of VAT applies to a contract, they should add the standard rate of VAT (20%) to the net contract estimate, to avoid any potential undervaluing. Where VAT is initially payable but later recoverable it must still be included in the calculation of the estimated value of the contract.
The Public Contracts (Scotland) Regulations 2015
In practice, RSLs primarily tend to procure contracts under The Public Contracts (Scotland) Regulations 2015 (“the 2015 Regulations”). The new threshold values particularly relevant to procurement exercises undertaken by RSLs under the 2015 Regulations from 1st January 2026 are:
| Supply and Services Contracts | Works Contracts | Social and other Specific Services | |
| New threshold (including VAT) | £207,720 Indicative value exc 20% VAT £173,100 | £5,193,000 Indicative value exc 20% VAT £4,327,500 | £663,540 Indicative value exc 20% VAT £552,950 |
Details of all changes to the procurement thresholds can be found here.
The Procurement Reform (Scotland) Act 2014
The updated thresholds outlined above do not affect the thresholds set out in the Procurement Reform (Scotland) Act 2014 (“the 2014 Act”). Under the 2014 Act, contracts with an estimated value of £50,000 or more (for goods and services) or £2 million or more (for works) must be advertised on the Public Contracts Scotland website. In addition, where a RSL awards a contract with a value meeting these thresholds, an award notice must also be published on the Public Contracts Scotland website. These thresholds remain exclusive of VAT.
While the monetary thresholds under the 2014 Act themselves remain unchanged, they have recently been the subject of consultation by the Scottish Government. Further details of this consultation can be found here. We will continue to monitor developments and provide updates on the outcome of any consultation response.
If you would like to find out more about the new public procurement thresholds please contact a member of our team.
