Free IOU / Debt Acknowledgement Template
An IOU (I Owe You) is a simple written acknowledgement that one person owes money to another. While less formal than a loan agreement, a signed IOU provides valuable evidence of a debt under English law and helps avoid misunderstandings between friends, family, or colleagues in the UK.
What Is an IOU?
An IOU is a short, informal document in which one person (the borrower) acknowledges that they owe a specific sum of money to another person (the lender). It typically records the amount, the date, and the names of both parties, and is signed by the borrower.
IOUs are most commonly used for informal or personal loans — money lent between friends, family members, or colleagues — where a full loan agreement feels unnecessary. Despite their simplicity, IOUs are recognised as evidence of a debt under English law.
While an IOU is less detailed than a formal loan agreement (it may not cover interest, repayment schedules, or default terms), it is far better than relying on a verbal promise. A signed IOU can be used as evidence in county court proceedings if the debt is not repaid.
What's Covered in This Template
Our IOU template keeps things simple while covering the essentials:
Lender Details
Full name and address of the person lending the money.
Borrower Details
Full name and address of the person receiving and owing the money.
Amount Owed
The specific sum acknowledged as owed, in both figures and words.
Date of Loan
When the money was lent or the debt arose.
Reason for Loan
Optional description of why the money was borrowed.
Repayment Date
When the borrower agrees to repay, if a date is set.
Interest
Whether any interest is charged and at what rate (optional).
Borrower Signature
Dated signature of the borrower confirming the debt.
Witness
Optional witness signature for added credibility.
How to Create an IOU
Follow these steps to document a personal loan simply and effectively:
- 1
Agree the Amount
Confirm exactly how much is being lent. Write the amount in both numbers and words to avoid ambiguity.
- 2
Set a Repayment Date
Agree when the money will be repaid. This can be a specific date, "on demand," or in instalments.
- 3
Decide on Interest
Most informal IOUs between friends or family are interest-free, but you can include interest if both parties agree.
- 4
Fill in the Template
Complete both parties' details, the amount, dates, and any additional terms.
- 5
Sign and Keep Copies
The borrower signs and dates the IOU. Both parties should keep a copy. Having a witness sign adds evidential weight.
Legal Considerations
IOUs are simple documents, but they interact with important areas of English law including limitation periods and evidence rules.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified solicitor for advice specific to your situation.
Reviewed for England & Wales law
Evidential Value
An IOU is evidence of a debt, not a contract in itself under English law. However, combined with evidence that money was actually transferred (bank statements, etc.), it provides strong proof in any UK county court claim for recovery of the debt.
Limitation Period
Under the UK Limitation Act 1980, the creditor has six years from the date the debt became due to bring a claim in England and Wales. If the IOU is signed as a deed (executed with the formalities of a deed), the limitation period extends to twelve years.
Interest
If no interest is specified, the lender generally cannot charge interest on an informal loan in the UK unless the court awards it under section 69 of the County Courts Act 1984. To charge interest, it should be agreed in writing at the outset under British law.
Tax Implications
Personal loans between individuals are generally not taxable for the borrower in the United Kingdom. However, if interest is charged, the interest income may be taxable for the lender. Large sums lent interest-free between non-family members could, in rare cases, raise questions about gifts or disguised transactions under British tax rules.
Frequently Asked Questions
Record Your Loan Simply and Clearly
Use our free IOU template to document informal loans between friends, family, or colleagues. Complete and download in minutes.
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