AIBU to ask whether to pay back loan or invest in pension?

[SolarLightxoxo]

We took out a Bounce Back Loan for our family business (limited company) at the start of the pandemic due to the fact we were unable to work. However, we have not used the money as we have been able to diversify into a different type of business that can be done working from home.

Our family business is essentially me and DH (56 and 55). I am conscious that we have no pension plans in place. I am wondering if it would be best to keep Bounce Back Loan of £24000 and invest it in private pensions purchased by our limited company. We would then pay off BBL at a rate of 2.5%, which would cost about £600 per year in interest payments.

Alternatively, would it just be better to pay back the Bounce Back loan in full and try to finance pension plans from future income?

Thanks for any advice!

Invest in the pensions. The limited company payments into your pension schemes can be treated as an allowable expense to reduce your corporation tax liability.

You need to be careful that your company does not become insolvent, if it did and it was shown the BBL had been used to fund your pension you may be liable to pay some or all of it back

Thank you @islerunner and @CosmicMonkey. Both of you have made very useful points.