diff --git a/app/config.py b/app/config.py
index 645f0042f..2cd1bc3fb 100644
--- a/app/config.py
+++ b/app/config.py
@@ -36,6 +36,11 @@ class Config(object):
     ASSETS_DEBUG = False
     AWS_REGION = 'eu-west-1'
     DEFAULT_SERVICE_LIMIT = 50
+    DEFAULT_FREE_SMS_FRAGMENT_LIMITS = {
+        'central': 250000,
+        'local': 25000,
+        'nhs': 25000,
+    }
     EMAIL_EXPIRY_SECONDS = 3600 * 24 * 7  # one week
     HEADER_COLOUR = '#FFBF47'  # $yellow
     HTTP_PROTOCOL = 'http'
diff --git a/app/main/views/add_service.py b/app/main/views/add_service.py
index 8019199e6..a6779fc38 100644
--- a/app/main/views/add_service.py
+++ b/app/main/views/add_service.py
@@ -45,6 +45,7 @@ def _create_service(service_name, organisation_type, email_from, form):
             service_name=service_name,
             organisation_type=organisation_type,
             message_limit=current_app.config['DEFAULT_SERVICE_LIMIT'],
+            free_sms_fragment_limit=current_app.config['DEFAULT_FREE_SMS_FRAGMENT_LIMITS'].get(organisation_type),
             restricted=True,
             user_id=session['user_id'],
             email_from=email_from,
diff --git a/app/notify_client/service_api_client.py b/app/notify_client/service_api_client.py
index aa92b0e1b..a35044e6c 100644
--- a/app/notify_client/service_api_client.py
+++ b/app/notify_client/service_api_client.py
@@ -20,6 +20,7 @@ class ServiceAPIClient(NotifyAdminAPIClient):
         self,
         service_name,
         organisation_type,
+        free_sms_fragment_limit,
         message_limit,
         restricted,
         user_id,
@@ -31,6 +32,7 @@ class ServiceAPIClient(NotifyAdminAPIClient):
         data = {
             "name": service_name,
             "organisation_type": organisation_type,
+            "free_sms_fragment_limit": free_sms_fragment_limit,
             "active": True,
             "message_limit": message_limit,
             "user_id": user_id,
diff --git a/tests/app/main/views/test_add_service.py b/tests/app/main/views/test_add_service.py
index b40b7a85d..ee584a27a 100644
--- a/tests/app/main/views/test_add_service.py
+++ b/tests/app/main/views/test_add_service.py
@@ -1,3 +1,4 @@
+import pytest
 from flask import url_for, session
 
 from app.utils import is_gov_user
@@ -43,6 +44,7 @@ def test_should_add_service_and_redirect_to_tour_when_no_services(
         service_name='testing the post',
         organisation_type='local',
         message_limit=app_.config['DEFAULT_SERVICE_LIMIT'],
+        free_sms_fragment_limit=25000,
         restricted=True,
         user_id=api_user_active.id,
         email_from='testing.the.post'
@@ -67,6 +69,11 @@ def test_should_add_service_and_redirect_to_tour_when_no_services(
     )
 
 
+@pytest.mark.parametrize('organisation_type, free_allowance', [
+    ('central', 250 * 1000),
+    ('local', 25 * 1000),
+    ('nhs', 25 * 1000),
+])
 def test_should_add_service_and_redirect_to_dashboard_when_existing_service(
     app_,
     logged_in_client,
@@ -74,19 +81,22 @@ def test_should_add_service_and_redirect_to_dashboard_when_existing_service(
     mock_create_service_template,
     mock_get_services,
     api_user_active,
+    organisation_type,
+    free_allowance,
 ):
     response = logged_in_client.post(
         url_for('main.add_service'),
         data={
             'name': 'testing the post',
-            'organisation_type': 'central',
+            'organisation_type': organisation_type,
         }
     )
     assert mock_get_services.called
     mock_create_service.assert_called_once_with(
         service_name='testing the post',
-        organisation_type='central',
+        organisation_type=organisation_type,
         message_limit=app_.config['DEFAULT_SERVICE_LIMIT'],
+        free_sms_fragment_limit=free_allowance,
         restricted=True,
         user_id=api_user_active.id,
         email_from='testing.the.post'
diff --git a/tests/app/notify_client/test_service_api_client.py b/tests/app/notify_client/test_service_api_client.py
index 710d2260d..a77090a5f 100644
--- a/tests/app/notify_client/test_service_api_client.py
+++ b/tests/app/notify_client/test_service_api_client.py
@@ -57,6 +57,7 @@ def test_client_creates_service_with_correct_data(
     client.create_service(
         service_name='My first service',
         organisation_type='central_government',
+        free_sms_fragment_limit=2,
         message_limit=1,
         restricted=True,
         user_id=fake_uuid,
@@ -72,6 +73,7 @@ def test_client_creates_service_with_correct_data(
             name='My first service',
             # The rest pass through with the same names
             organisation_type='central_government',
+            free_sms_fragment_limit=2,
             message_limit=1,
             restricted=True,
             user_id=fake_uuid,
diff --git a/tests/conftest.py b/tests/conftest.py
index 2051247fd..27bcad9a1 100644
--- a/tests/conftest.py
+++ b/tests/conftest.py
@@ -488,7 +488,15 @@ def mock_get_service_with_letters(mocker, api_user_active):
 
 @pytest.fixture(scope='function')
 def mock_create_service(mocker):
-    def _create(service_name, organisation_type, message_limit, restricted, user_id, email_from):
+    def _create(
+        service_name,
+        organisation_type,
+        message_limit,
+        free_sms_fragment_limit,
+        restricted,
+        user_id,
+        email_from,
+    ):
         service = service_json(
             101, service_name, [user_id], message_limit=message_limit, restricted=restricted, email_from=email_from)
         return service['id']
@@ -499,7 +507,15 @@ def mock_create_service(mocker):
 
 @pytest.fixture(scope='function')
 def mock_create_duplicate_service(mocker):
-    def _create(service_name, organisation_type, message_limit, restricted, user_id, email_from):
+    def _create(
+        service_name,
+        organisation_type,
+        message_limit,
+        free_sms_fragment_limit,
+        restricted,
+        user_id,
+        email_from,
+    ):
         json_mock = Mock(return_value={'message': {'name': ["Duplicate service name '{}'".format(service_name)]}})
         resp_mock = Mock(status_code=400, json=json_mock)
         http_error = HTTPError(response=resp_mock, message="Default message")