Alternative investments like Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) have been essential tools for investors seeking tax-efficient ways to support early-stage businesses. But recent changes to tax reliefs, increasing illiquidity, and growing concerns about the long-term viability of these alternative investments have raised the question: Are these structures still the best option for investors in today’s market?1
As VCT and EIS products face challenges, peer-to-peer lending platforms such as The Money Platform provide another way investors may allocate capital to loan-based investments, offering scheduled cash flows and greater transparency by allowing users to directly invest in personal loans without the complex and uncertain risks that come with equity investments in early stage companies.
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While VCTs and EIS once boasted strong fundraising numbers, their market share has been shrinking in recent years. VCT fundraising has softened in recent years: while the 2021/22 and 2022/23 tax years saw over £1 billion raised, HMRC data shows that the amount raised in 2023/24 dropped to £873 million, around 17% lower than the previous year, and with the number of investors claiming income tax relief also falling.2 The decline of these tax-efficient venture investment schemes can be attributed to several factors, including the reduction in tax relief and the widening discounts in secondary market pricing of VCT shares. Investors are increasingly wary of the illiquidity and valuation challenges that come with these alternative investments, where the true value of investments can only be understood years down the line, often with high levels of volatility.
Moreover, EIS investments have become increasingly concentrated among high earners who are seeking to reduce their tax liabilities. HMRC’s evaluations suggest that these products remain out of reach for the average retail investor, limiting their broader appeal.
In addition, the recent tax relief cuts, notably the scheduled reduction by the UK Government when they confirmed in the Autumn Budget 2025 that the income tax relief on Venture Capital Trusts will be reduced from 30% to 20% from 6 April 2026.3 This will especially impact those who have relied on the tax incentives as a primary motivation for selecting VCTs as one of their alternative investments.
One of the most significant drawbacks of VCT and EIS investments is their illiquidity. These alternative investments tie up capital for extended periods, often with no clear exit strategy unless a company is sold or goes public. EIS investments are held in unquoted companies with no active secondary market, investors often cannot sell their holdings until a trade sale, flotation or other exit event occurs. In the absence of such outcomes, capital can remain illiquid for many years. While VCT shares may be listed, but secondary market liquidity is often thin, and share prices may sit at a discount to the net asset value. For investors seeking clearer cashflow visibility in their investment portfolios, this is a major disadvantage.
For many investors, the promise of high returns from early-stage investments does not outweigh the long holding periods and the risk of investing in businesses that may never exit successfully.
Unlike VCTs and EIS, which are reliant on equity risk and exit events, P2P lending operates around defined loan terms and contractual repayments. When investing in loans with The Money Platform, investors lend directly to borrowers and receive scheduled interest and principal repayments over the life of each loan. The majority of TMP loans run for between 2-4 months, with longer-term products extending up to around 12-18 months, allowing investors to choose between different investment ‘buckets’ based on loan size, term length, and risk profile. This gives investors far greater control over the capital duration and cashflow expectations of their alternative investment portfolios, creating a more structured, income-led experience when compared with VCT and EIS which depend on uncertain exits.
While venture capital style investments like VCTs and EIS require long-term capital commitments with uncertain exit timelines, P2P lending allows investors to receive returns sooner and in a more consistent, manageable way. Investors can choose loans with fixed repayment schedules, and the risk of borrower default is clearly communicated, enabling investors to make informed decisions based on clearly defined terms.
For investors prioritising defined terms over high-risk equity exposure in their portfolios, P2P lending can offer a structured, contractual alternative investment where returns are tied to the repayment of loans rather than the uncertain growth of early-stage businesses.
At The Money Platform, we are fully FCA-regulated peer-to-peer lending platform, ensuring that we adhere to strict operational standards to protect our investors. One of the key safeguards we provide is client money segregation: investor funds are kept completely separate from TMP’s operating capital, reducing the risk of cross-contamination and ensuring that your investor funds remain protected and segregated.
We also have robust wind-down plans and liquidity monitoring to ensure that if anything goes wrong, we can wind down operations smoothly without impacting investor funds on the platform. Our platform undergoes audits to ensure that we comply with all FCA regulations, providing you with peace of mind knowing that we are committed to strong governance and transparency.
At The Money Platform, we understand that our interests must align with yours. That is why we have built our procedures around lender protection. We have a proven and refined collections process, developed with the insight of a former Senior Financial Ombudsman adjudicator.
We split profits with lenders, ensuring that our financial incentives are directly aligned with the lenders. There are no platform fees for lenders, so we only succeed when you succeed. Additionally, our proprietary TMP score is constantly refined through data analysis, aiming to only send the best loan leads to our lenders, giving you the best chance for double-digit returns on your strong returns when investing in loans.4
As the VCT and EIS market faces increasing challenges from tax relief reductions to liquidity issues, investing in loans can offer a more liquid and accessible alternative investment. The Money Platform provides a regulated, transparent, and investor-controlled environment centred on structured lending and income generation, rather than speculative equity upside.
If you are looking for more control, fair returns, and greater transparency in how your capital is deployed, investing in high-cost short-term loans through The Money Platform could be a strong choice for your portfolio.
If you are still learning about loan investing, peer-to-peer lending, or how online lending platforms work, we have a range of guides and insights to help you explore further.
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Loans are subject to status and affordability. Over 20 years only.
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