PPN 11/23 New Thresholds from 1 January 2024: the official action note, explained

The key facts

• PPN 11/23 was issued in December 2023 and gave advance notification of new thresholds effective from 1 January 2024.
• It applies to all contracting authorities as defined by the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concession Contracts Regulations 2016 and Defence and Security Public Contracts Regulations 2011.
• Public contracts supplies and services thresholds from 1 January 2024 are £139,688 for central government bodies and £214,904 for others, with subsidised services contracts at £214,904 for all bodies.
• Works, including subsidised works contracts, are set at £5,372,609, and concession contracts at the same figure.
• The light touch regime for services is £663,540 for all bodies.
• Small lots are £70,778 for supplies and services and £884,720 for works.
• Utilities and defence and security supplies and services are £429,809, with works at £5,372,609 in both regimes.
• Thresholds for small lots, light touch regime services and below threshold contracts were not subject to the two year currency fluctuation amendment and were not changed.
• Under the UK regulations, estimated contract value for notice publication is exclusive of VAT. Under the Procurement Act 2023 it must be inclusive of VAT.
• Thresholds are revised every two years to reflect currency fluctuations and comply with the World Trade Organisation Agreement on Government Procurement.

What PPN 11/23 is and who it applies to

PPN 11/23 is an action note issued in December 2023 giving advance notification of the new thresholds applying for the purposes of the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011, collectively described in the note as the UK regulations.

Its scope is broad. It applies to all contracting authorities as defined by those regulations, which includes central government departments, their executive agencies, non-departmental public bodies and other public sector organisations. Unlike many policy notes, this is not a central government only instrument, because thresholds are a matter of law for every authority covered by the regulations.

The note asks that it be circulated within the organisation, drawing it to the attention of those with a commercial and procurement role. The new thresholds came into effect from 1 January 2024, and were made by the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2023.

The thresholds from 1 January 2024

Under the Public Contracts Regulations, supplies and services other than subsidised services contracts are set at £139,688 for central government bodies, defined as the Crown and the bodies listed in Schedule 1, and £214,904 for other bodies. Subsidised services contracts are £214,904 for all bodies. Works, including subsidised works contracts, are £5,372,609 for all bodies.

The light touch regime for services is £663,540 for all bodies. Small lots are £70,778 for supplies and services and £884,720 for works. Under the Utilities Contracts Regulations 2016, supplies and services are £429,809 across all sectors and works are £5,372,609, with the same small lots figures. Concession contracts under the Concession Contracts Regulations 2016 are £5,372,609.

Under the Defence and Security Public Contracts Regulations 2011, supplies and services across all sectors are £429,809 and works are £5,372,609, again with small lots at £70,778 for supplies and services and £884,720 for works. The note is explicit that thresholds for small lots, light touch regime services and below threshold contracts are not subject to the two year currency fluctuation amendment required to comply with Agreement on Government Procurement obligations, and were not amended.

The VAT change flagged for the new regime

One paragraph in PPN 11/23 has outlived the thresholds themselves. For the purposes of publishing notices under the UK regulations, the estimated contract value should continue to be provided exclusive of VAT. However, the note warns that when the Procurement Act 2023 comes into effect, for the publication of any notices under the new legislation the estimated contract value must be provided inclusive of VAT.

At the time of writing the note, the new procurement regime was expected to come into effect in autumn 2024, with further guidance promised. In the event, the Procurement Act 2023 and the Procurement Regulations 2024 apply to procurements commenced on or after 24 February 2025, and the inclusive of VAT convention now runs through the new regime, including value tests in later policy notes.

This is a genuine trap for teams that have carried old estimating habits forward. A requirement sitting just below a threshold on an exclusive of VAT basis can sit above it once VAT is included. Anyone maintaining spreadsheets, thresholds tables or approval matrices built before the change should check which basis they use.

Why thresholds move, and what that means in practice

The note explains the mechanism. Thresholds at which public procurement opportunities are subject to the full suite of UK regulations are revised every two years to take account of currency fluctuations and to ensure the UK complies with its obligations under the World Trade Organisation Agreement on Government Procurement. They are not a policy lever, they are an exchange rate adjustment against internationally agreed values.

That regularity is useful. It means threshold changes are predictable events that should be diarised, with a standing task to update internal guidance, approval limits, templates and any automated checks. The fact that small lots, light touch and below threshold figures sit outside the two year adjustment is equally worth recording, because assuming everything moves together produces errors.

For suppliers the practical importance is knowing whether an opportunity is regulated. The threshold determines which obligations attach, from notice publication to the procedural rules that follow, and therefore what a supplier can reasonably expect in terms of transparency and process.

How eSourcing Data helps

Threshold decisions are only as good as the value estimate behind them, and the record of how that estimate was reached. eSourcing Data keeps the requirement, the estimated value and the resulting route to market together, so the reason a procurement was treated as above or below threshold is visible later rather than reconstructed from memory.

Because the basis for value changed with the new regime, from exclusive of VAT under the UK regulations to inclusive of VAT for notices under the Procurement Act 2023, consistency matters more than it used to. Running competitions through one system with consistent fields reduces the risk of the same contract being valued on two different bases in two different documents, and supports accurate notice publication.

Reporting across the pipeline also helps teams see clustering just below threshold levels, which is where aggregation and lotting questions tend to arise, and where below threshold workflows need to be proportionate but still recorded.

What to do about it

1. 1Check that internal guidance, approval limits and templates reflect the thresholds effective from 1 January 2024.
2. 2Confirm which threshold applies to your organisation for supplies and services, £139,688 for central government bodies or £214,904 for others.
3. 3Record that small lots, light touch regime and below threshold figures were not changed by the two year adjustment.
4. 4Review whether your value estimates are prepared exclusive or inclusive of VAT, and align them with the regime the procurement falls under.
5. 5Update any automated threshold checks and finance approval matrices at the same time as procurement guidance.
6. 6Diarise the next two yearly threshold revision so the update is planned rather than reactive.
7. 7Brief finance and budget holders, since value estimation errors usually start outside the commercial team.