Public procurement thresholds are changing from 1 January 2022. This usually happens every two years. Now that we’ve left the EU, the revision is implemented via UK statute. SEC, our Members and Guest users are all bound by the new thresholds.
This year the thresholds will increase – but a key change is that the thresholds will now operate inclusive of VAT. This is a move away from current thresholds in place up until 31 December which run exclusive of VAT.
What are the new thresholds?
For sub-central authorities such as SEC, housing associations and local authorities the new thresholds are:
- Goods / services – £213,477 (incl. VAT). If you remove VAT then this is £177,897.50
- Works – £5,336,937 (incl. VAT). If you remove VAT then this is £4,447,447.50
These values are for the entire contract value across the lifetime of the contract.
Why is VAT now included?
Since the UK left the EU we have become an independent party to the Global Procurement Agreement (GPA), rather than through our EU membership. The EU has an arrangement under the GPA whereby it does not include VAT in its thresholds due to different rates of VAT across member states. This arrangement no longer applies to the UK and so our thresholds will now include VAT.
What does this mean for you?
Under current procurement regulations, for contracts with estimated values above the relevant thresholds, Contracting Authorities must publish notices on the Government’s Find a Tender service.
SEC and our customers will need to take a new approach when calculating contract value and remember to take account of any VAT payable when assessing whether the appropriate threshold is reached.
We’ll be updating our processes from 1 January to align with the change. When using our services we’ll always remind you of the VAT inclusion.
If you’ve any questions, or would like to talk about this further contact Gavin, our Procurement Manager – firstname.lastname@example.org