Minimum turnover for tenders in the UK: the 2023 rules

Minimum turnover for tenders is no longer capped at twice the contract value outside Scotland. Under the Procurement Act 2023, a buyer can only set financial conditions that are a proportionate means of ensuring you have the legal and financial capacity to perform the contract (s.22(1) and (5)). A threshold that looks too big is not an automatic “no”, and you have options.

Which rules apply to you depends on who is buying. For English, Welsh and Northern Irish buyers procuring under the Act, read on for the current position. For devolved Scottish authorities, the old twice-the-contract-value cap still applies, so the Scotland section below matters. A procurement commenced before 24 February 2025 falls outside the Act (PPN 014, para 8), so check the notice date.

What “financial standing” means in a tender

Buyers want to know you can keep delivering if costs rise or a payment is late. The Act lets them set conditions on legal and financial capacity (s.22(1)(a)). Those conditions must be proportionate to the contract’s nature, complexity and cost (s.22(5)).

The Central Digital Platform stores supplier information that may be relevant to assessing conditions of participation (paras 37-38), so keep your profile there up to date. Check the tender documents for the actual threshold.

The old 2x turnover rule, and where it still applies

Formerly, the Public Contracts Regulations 2015 said a buyer’s minimum yearly turnover requirement should not exceed twice the estimated contract value, except in duly justified cases (reg 58(9)). That regulation was revoked on 24 February 2025. You’ll still see blogs treating it as current.

It does still apply in Scotland. Devolved Scottish authorities are outside the Act (s.2(5)(a)) and procure under the Public Contracts (Scotland) Regulations 2015, where reg 59(9) keeps the twice-the-contract-value cap, with exceptions for justified reasons. Our Scotland page lists live Scottish tenders.

How buyers test turnover now

Central government guidance (Government Commercial Agency) covers assessing the economic and financial standing of suppliers (updated 30 Sep 2026). It is written for central government departments, agencies and non-departmental public bodies, and other buyers may adopt it. It describes:

• Turnover ratio: bidder annual revenue divided by expected annual contract value. A higher ratio suggests a bidder can more easily absorb the contract.
• Reasonable thresholds: they should be “set at a reasonable level” so smaller suppliers aren’t unfairly shut out.
• Not the sole test: buyers should normally not exclude a bidder solely on the basis of the ratio, unless the risk is exceptionally high and remains unacceptable after mitigations.
• Contract tiers: Gold (most critical), Silver and Bronze contracts get different depths of checking. Bronze contracts, which are typically smaller and simpler, may use a more basic assessment, including credit scores. The guidance says a score alone shouldn’t be used to conclude a bidder is higher risk.
• SMEs: assessment shouldn’t inadvertently disadvantage them.

This is guidance, and each buyer sets its own conditions, so read the pack.

What buyers can’t ask for

A buyer cannot require audited accounts as a condition unless the Companies Act 2006 (or an overseas equivalent) already requires the supplier to have them audited (s.22(3)(a)). If you’re not required to, the guidance (para 17) says alternative evidence will need to be assessed instead. The central government guidance lists bankers’ statements, guarantees and bonds, and management accounts as examples.

Below the turnover bar? Your options

Bid for smaller lots or below-threshold contracts

In the week to 10 Oct 2026, 62 of 470 live notices were multi-lot (as of 10 Oct 2026; how we count). A smaller lot means a smaller expected annual value, which lowers the turnover a buyer is likely to want. Check whether the pack lets you bid for one lot.

For regulated below-threshold contracts, the Act says a buyer may not restrict the submission of tenders by reference to an assessment of a supplier’s suitability to perform the contract, and suitability includes legal and financial capacity (s.85(1)-(2)). So a turnover bar can’t be used to stop you tendering. There are exceptions: works contracts worth £135,018 or more for central government authorities, or £207,720 or more for others (from 1 January 2026), contracts awarded by devolved Welsh authorities, and contracts awarded under a framework (s.85(3) and (5)). Check the notice to see which kind of contract it is.

Bid with a partner or as a subcontractor

A supplier is treated as meeting a condition to the extent an associated supplier does. Suppliers are associated if they tender together, or if the buyer is satisfied one will subcontract to the other or guarantee the other’s performance (s.22(8)-(9)).

Work out your own ratio first

Use the central government guidance’s formula before you decide to bid. As arithmetic only: a contract worth £300,000 over three years has an expected annual value of £100,000 (assuming an even spread; where it varies, the guidance uses the highest expected annual value). A firm turning over £400,000 a year would have a ratio of 4. A firm turning over £60,000 would have a ratio of 0.6, which is the sort of gap where a guarantee, a partner or a smaller lot matters. These figures are made up to show the sum, not guidance on what any buyer requires.

Offer a parent company guarantee

The central government guidance says a parent company guarantee can be sought as a mitigation where a bidder in a group can’t show low or medium risk. A written commitment from the parent is normally enough before award, and the guarantor’s finances are assessed too.

Offer bank references and other evidence

The same guidance accepts bankers’ statements, references and management accounts where audited accounts aren’t available.

What to have ready

Keep a short pack of financial evidence so you can respond quickly: your latest filed or management accounts, a recent bank statement or reference, details of any parent company or partner who might guarantee or join you, and your turnover figure for the last full year. If you’re not required to have audited accounts, say so in your answer and offer the alternatives above.

Ask a clarification question

If a threshold looks out of proportion, ask the buyer through the portal. Be specific: say what your turnover is, and what evidence you can offer instead. Our bid or no bid guide covers when it’s worth the effort.

Where contract sizes sit (our data)

Of 366 live notices with a stated value in the week to 10 Oct 2026, the median was £400,000. 85 were under £100k, 157 were between £100k and £1m, and 124 were over £1m (as of 10 Oct 2026; how we count). Use them to see where your business sits. The central government guidance’s ratio compares your turnover with the expected annual contract value, not the total value.

For insurance conditions, which follow a different timing rule, see public liability insurance. For wider guidance on local buyers, see council contracts for small businesses.

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