SONIA
Sterling Overnight Index Average — the Bank of England's overnight interest rate benchmark for GBP.
Definition
SONIA is published daily by the Bank of England and represents the average interest rate banks pay to borrow sterling overnight. It replaced LIBOR as the primary GBP benchmark rate. SONIA compounded over a relevant term period is used as the risk-free starting point when estimating a GBP borrowing rate.
Why it matters
SONIA-derived term rates are the standard benchmark for GBP IBR (and FRS 102 OBR) calculations in UK lease accounting. The rate is widely cited in professional guidance from ICAEW, KPMG, and others.
In AuditLease
AuditLease's borrowing rate suggestion panel uses a benchmark rate plus your entity credit spread to estimate a borrowing rate. You can use the accepted estimate as the IBR under either framework, or as the FRS 102 OBR where you judge it appropriate, or override it with your own rate.
Related terms
Official sources
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence, so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.