IOU Agreement Template for the UK
Generate a bespoke document
What is an IOU Agreement?
An IOU template is a ready-to-use document that records a simple written promise to repay money you owe someone. Download it free, fill in the amount, the repayment terms and both names, then print and sign. In England and Wales an IOU is legally binding and enforceable as a debt once both parties sign it.
While less formal than a full loan agreement, an IOU still creates a binding contract under English law when it includes the basics: the amount borrowed, repayment terms, and signatures of both parties.
Courts in England and Wales will generally enforce IOUs as valid debt instruments, provided there's clear evidence the borrower intended to repay. Under the Limitation Act 1980, a simple contract debt is recoverable for six years from the date repayment falls due. They're commonly used between friends, family members, or small businesses for short-term lending. For larger amounts or complex repayment schedules, a fuller agreement is the safer choice.
The template on this page is current for 2026 and reflects the position under English law. It's designed to give you a written record you can rely on without paid legal advice, so you can settle a loan between two people, or between a person and a company, with the terms captured clearly.
Frequently Asked Questions
When should you use an IOU Agreement?
Use an IOU when you need to document a straightforward loan between friends, family members, or small business associates in England and Wales. It's most useful for short-term lending under £5,000 where you trust the borrower but still want basic legal protection without the complexity of a formal loan contract. You can create one in minutes: download the template, complete it, and both parties sign.
The agreement works best for single payments or simple repayment schedules. For larger amounts, business loans, or arrangements involving interest or collateral, consider a comprehensive loan agreement instead. Even a basic IOU remains enforceable if the borrower defaults, so keep a signed copy safe.
If your arrangement grows more complex, or one party is a company lending to another, you may want fuller terms rather than a single IOU covering the entire debt. In those cases a structured loan agreement gives both sides clearer protection.
What are the different types of IOU Agreement?
- Basic Promissory Note IOU: The simplest form, stating only the amount borrowed and promise to repay
- Scheduled Payment IOU: Includes specific dates and amounts for multiple repayments
- Interest-Bearing IOU: Details both principal and agreed interest rates
- Secured IOU: Names specific assets as collateral for the loan
- Witnessed IOU: Includes third-party signatures to strengthen legal validity
Who should typically use an IOU Agreement?
- Individual Lenders: Friends, family members, or private individuals who loan money and need a written record of the debt
- Individual Borrowers: People seeking informal loans who want to demonstrate their commitment to repayment
- Small Business Owners: Entrepreneurs using IOUs for short-term cash flow between trusted business associates
- Witnesses: Independent third parties who sign the IOU to strengthen its legitimacy
- Legal Advisors: Solicitors who may review or enforce IOUs when payment disputes arise
How do you write an IOU Agreement?
- Loan Details: Record the exact amount being borrowed and any agreed interest rate
- Party Information: Gather full legal names and addresses of both lender and borrower
- Payment Terms: Specify repayment date(s) and method(s) of payment clearly
- Witness Planning: Arrange for an independent witness to observe the signing
- Documentation: Make three copies - one each for lender, borrower, and witness
- Signatures: Ensure all parties sign and date the document in each other's presence
What should be included in an IOU Agreement?
A clear IOU includes the following to stay enforceable in England and Wales. Work through each item before you print and sign:
- Identification: Full legal names and addresses of both lender and borrower
- Loan Amount: The exact sum owed, written in both numbers and words
- Payment Terms: Clear statement of the repayment date and any instalment schedule
- Interest Rate: Any agreed interest rate, clearly stated as an annual percentage
- Signature Block: Space for dated signatures of both parties and a witness
- Default Clause: Consequences of non-payment or late payment
- Governing Law: Statement that English law applies, confirming the right jurisdiction if you ever need to enforce the debt
What's the difference between an IOU Agreement and an Access Agreement?
An IOU Agreement differs significantly from a formal Loan Agreement. The comparison below explains when to use each type of document in England and Wales.
| Feature | IOU Agreement | Loan Agreement |
|---|---|---|
| Formality level | Informal, suited to personal loans between trusted parties | Comprehensive legal contract with detailed terms and conditions |
| Complexity | Basic information about the debt and repayment | Detailed clauses covering interest calculations, default procedures, and security |
| Legal protection | Legally binding, lighter on detail | Stronger protection and easier enforcement due to detailed terms |
| Cost and time | Written quickly at no cost | Often needs more time and legal advice to prepare |
Neither document should be treated as a substitute for advice on a large or unusual debt. For most everyday loans, though, a signed IOU records the entire agreement in a single page. Keep the completed document private between the parties, since it contains personal financial information you'll want to protect.
Why Trust GenieAI?
- 244,337 businesses have trusted GenieAI to draft 365,360 legal documents (and growing).
- Across every document GenieAI reviews, the median document carries 4 high-priority risks.
- Vague or ambiguous wording is the single most common problem, at 14.6% of all issues raised.
- GenieAI reviews a full contract, clause by clause, in typically under two minutes.
Source: GenieAI internal data Updated 6 hours ago
About the IOU Agreement
- Loan Details: Record the exact amount being borrowed and any agreed interest rate
- Party Information: Gather full legal names and addresses of both lender and borrower
- Payment Terms: Specify repayment date(s) and method(s) of payment clearly
- Witness Planning: Arrange for an independent witness to observe the signing
- Documentation: Make three copies - one each for lender, borrower, and witness
- Signatures: Ensure all parties sign and date the document in each other's presence
Explore 208,390+ legal templates
Explore 208,390+ legal templates
Genie's Security Promise
Genie is the safest place to draft. Here's how we prioritise your privacy and security.
Your data is private:
We do not train on your data; Genie's AI improves independently
All data stored on Genie is private to your organisation
Your documents are protected:
Your documents are protected by ultra-secure 256-bit encryption
We are ISO27001 certified, so your data is secure
Organizational security:
You retain IP ownership of your documents and their information
You have full control over your data and who gets to see it