An IBAN, or International Bank Account Number, is a standardised code that identifies an individual account for cross-border payments. A UK IBAN has 22 characters beginning with the country code GB, and packages the sort code and account number.
In one line: An IBAN is the international format of an account number used to send and receive payments across borders.
How an IBAN works
An IBAN begins with a two-letter country code and two check digits, followed by the bank identifier, sort code and account number. The check digits let the system flag a mistyped IBAN before sending.
A UK IBAN looks like GB29 NWBK 6016 1331 9268 19, which embeds the domestic sort code and account number. A bank usually shows it on statements and in online banking for receiving overseas payments.
For payments within Europe an IBAN is often required, sometimes alongside a BIC or SWIFT code that identifies the receiving bank internationally.
IBAN vs sort code
A sort code and account number are enough for domestic UK transfers. An IBAN restates the same account in an international format so foreign banks can route to it.
An IBAN identifies the account, while a BIC or SWIFT code identifies the bank, so an international payment can need both.
Primary source: Bank of England / ISO 13616 (IBAN standard)