Government changes public procurement tendering thresholds to make them VAT inclusive

The next rebasing is due on 1 January 2022 and the Government has just published the new figures. However, there is a major change this time around. The new thresholds will be inclusive of VAT, rather than VAT exclusive as they are at the moment.

The new and current thresholds (other than for central government, utilities, and concession contracts) can be seen in the table below:

These new thresholds will apply to all procurements begun after 1 January 2022.

While the headline figures are higher than the current thresholds, the inclusion of VAT will mean that the new thresholds are actually lower for most contracts (unless they happen to be zero-rated or VAT exempt).

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¹ Special drawing rights are an accounting unit devised by the International Monetary Fund based on a basket of currencies including the pound, euro, dollar, yuan and the yen.

² The Light Touch Regime applies to ‘social and other specific services’ including health, education, catering, postal services and legal services.

 Please contact Andrew Millross for advice on this topic.

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