IOU – acknowledgement of debt – template
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IOU – acknowledgement of debt – what you need to know
An IOU (“I owe you”) is a short written acknowledgement that one person owes money to another. It is useful when money has already changed hands without a formal loan agreement, or to confirm a debt that was agreed verbally.
Is an IOU legally binding?
An IOU is good evidence that a debt exists and how much it is. It is strongest when it names both parties, states the amount in figures and words, gives a repayment date and is signed and dated by the person who owes the money. For larger sums or an instalment plan, a full loan agreement is clearer.
Time limits
In England and Wales a claim for a simple debt must normally be brought within six years. If the debtor later acknowledges the debt in writing or makes a payment, the six-year period starts again from that date.
Frequently asked questions
What is the difference between an IOU and a loan agreement?
An IOU confirms an existing debt and is signed only by the debtor. A loan agreement sets out the terms of a new loan – interest, instalments and so on – and is signed by both parties.
Does an IOU need a witness?
No, but a witness signature can help if it is later disputed.
Should I keep the original?
Yes. The person owed the money keeps the signed original; the debtor can keep a copy.
This template is for general information and is not legal advice. It reflects the law of England and Wales as at October 2026. Check that it fits your situation before signing and take legal advice in unusual cases.