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By Gareth Horsfall
This article is published on: 27th May 2026
My son turned 16 this year, and I guess it’s normal, especially in today’s world of instant gratification and media, that young adults would be curious about global political events.
It is therefore no surprise that he has been asking about the Iran/US war, how it started, and what the reason behind it is. Clearly, it is not easy to give a simple and quick answer to these sorts of questions, but often I simply answer, “follow the money.” If you follow the money trail, it will very likely lead to the main real reason why.
In the 2022 Ukraine/Russia conflict, we can see that the territory which has now been claimed by Russia in the eastern part of Ukraine, apart from being ethnically Russian, is also the most resource-rich part of Ukraine, holding the majority of Ukraine’s $15 trillion mineral wealth. The region accounts for roughly 80% of conventional oil, gas, and coal reserves, as well as critical minerals essential for defence and green technologies. The Dnieper-Donetsk Basin and the Donbas (Donets Basin) are the most resource-important parts of the country.
The east contains the overwhelming majority of Ukraine’s coal, natural gas, and conventional oil reserves. The region is also home to major deposits of iron ore, titanium, uranium, and lithium — materials that are highly prized for their use in aerospace, electronics, and electric vehicle battery industries. It’s no wonder that the war trudges on!
It is therefore no surprise that the recent Trump visit to China ended with reports (albeit from Trump himself — no word from China yet!) that China will now be buying more oil from the USA and less from the Middle East.
Is this a sign that China is not happy with recent events in the Gulf and has decided that its economic links and export-led economy are more tied to the US consumer than they would like to admit, and therefore they want to secure energy resources from them as well? Or merely a case that they are left with no choice?
Either way, the decision makes a lot of sense given that China is the largest consumer of oil in the world, and the US is the largest producer. In fact, the USA is, by a long way, the biggest oil producer in the world, pumping 13.58 million barrels of crude a day. Its nearest competitor is Russia on 9.87 million barrels of crude per day, closely followed by Saudi Arabia on 9.51 million barrels of crude a day. The three together account for 40% of the world’s supply! (The USA also now controls the Venezuelan energy infrastructure!)
So, energy reliance on the Straits of Hormuz is likely to decline in coming years given the chokehold that Iran has on the area. 20% of the world’s oil passed through the Straits of Hormuz prior to this war, and Europe was the most susceptible to Middle Eastern oil disruption. Trump is going to open up drilling in Alaska and, as more oil is pumped out of that region, then it’s likely that China and the rest of Asia will start buying more from Alaska as it comes online.
Just like I say to my son…..follow the money!
So, does this create a potential investment opportunity? It certainly does! Mining and oil exploration are starting to look attractive once again.
Our asset manager partners are keeping a close eye on the opportunities as they arise.
I know for the green investors amongst you this is the worst possible news, but the economic “West” can only protect its future development into a world of AI, robotics, and tech with access to primary resources which are not in what is considered economic or geopolitical hotspots.
I won’t blather on about this, but just to say:
In the meantime, a typical GBP multi-asset portfolio in a balanced risk profile returned around 17% p.a. over the last year to date, 31.49% over the last 3 years to date, and around 33% over the last 5 years. Average annual return over the last 5 years: 7.7%.
A typical EUR multi-asset portfolio in a balanced risk profile returned around 15% p.a. over the last year to date, 32% over the last 3 years to date, and around 31% over the last 5 years. Average annual return over the last 5 years: 5.27%.
The McKinsey Global Institute frequently discusses how similar cycles of pessimism and economic hardship impact consecutive decades and generations, meaning that every adult generation is likely to live through the same economic periods as the one before them at least once in their life, if not more.
I turned 18 (supposedly an adult!) in 1992. Prices hardly rose in real terms from 1992 until 2020. Then Covid, then Ukraine/Russia, and now the Middle East conflict. It’s now my turn to live through an inflationary period.
In 1973, an oil embargo lasted 6 months. Crude went up 400%. It never came back to where it started from.
1979 — The Iranian Revolution — prices doubled again.
Prices may fall back a little when the conflict settles, but are unlikely to settle back to previous levels. Given my eye-wateringly high gas heating bill over the last winter, I am not looking forward to next winter! But I still have the summer to try and avoid overheating!
Investing is the only way to protect your hard-earned capital. Do not sit in cash long term. Keep the things under your control under review — costs and your risk profile — and let the markets do the rest.
Inflation in Italy since 2020 sits officially at 18%, but the reality is that it is more likely 30–45% depending on location.
Between 5% and 7.5% per annum.
At a sustained 7.18% inflation rate, your money will halve in value in 10 years…
…this has the same effect as your healthcare costs, care homes, schools, trips for the kids and grandkids, flights, food, eating out, etc. doubling in value.
Making your money work harder for you is so important in periods like the one we are currently going through. Protecting your future is key.
At the moment I am working with a lot of clients to plan their UK Inheritance Tax liabilities and how to avoid them under the new UK Statutory Residence Test system.
Given the change to UK Inheritance Tax for non-UK residents, which will come into force in April 2027, it makes perfect sense for anyone who has already been away from the UK for more than 10 years, or anyone thinking of doing so, to take a good look at their financial affairs and see how they might be able to avoid UK inheritance tax, and in some cases avoid it altogether.
From next year, the rules will change from a domicile basis to a residence basis. Domicile was always a difficult link to break with the UK, regardless of where you were living in the world, and the UK always had the right to tax your worldwide estate if they deemed that you had sufficient ties to the UK at the time of your death.
Now, given the Statutory Residence Test rules, if you can show that you have been a non-UK resident for 10 out of the last 20 years, then your non-UK situs assets will not fall under UK inheritance tax law. UK situs assets will, however, still be subject to UK inheritance tax. When it comes to gifting assets to your spouse, then there are some new things to consider:
When both spouses have been outside the UK for more than 10 of the last 20 years and are considered non-UK long-term residents
You can no longer transfer an unlimited amount of UK situs assets between spouses. In this case, you can only transfer £325,000 on top of the nil-rate band, therefore a maximum of £650,000 before UK IHT at 40% is applied. If you have assets in the UK over £650,000 and qualify under the non-UK long-term resident rules, then the logical conclusion is that you look to move your assets outside the UK as soon as possible as part of your UK IHT planning exercise.
One of you is a UK long-term resident (has not yet qualified with 10 years’ continuous non-UK residency) and the other is a non-UK long-term resident
In this case, the logical conclusion is that, once again, you look to move your UK situs assets outside the UK, but by gifting them to your non-UK resident spouse. Your spouse would be subject to the same rule as above, i.e. a limit on the transferable amount at a £325,000 tax-free allowance plus a £325,000 additional non-UK long-term resident allowance, therefore £650,000 total. Anything over £650,000 would be subject to the UK’s potentially exempt transfer rules, i.e. if you live 7 years after the gift, then it is fully transferred and no longer in your estate for the purposes of inheritance tax in the UK. The obvious advantage of this approach is that your spouse is no longer subject to UK IHT and, if considered for IHT in Italy, then with some careful planning may be able to even reduce that to zero in Italy.
The alternative, depending on your own circumstances, is to keep the assets in your own name and move them outside the UK, taking the view that once your 10 years’ continuous non-UK residency has passed, then they no longer fall within your UK estate for IHT purposes.
Private pension funds
Unused private pension funds will be brought into the IHT net in the UK from April 6th, 2027. This is bad news for anyone with a sizeable pension pot in the UK. At the same time, the UK has imposed an Overseas Tax Charge on moving your pension outside the UK. In the past I have moved clients’ pension funds into a QROPS (Qualified Recognised Overseas Pension Scheme), and for European purposes those schemes were always located in Malta due to the compatible financial system there. Now, a transfer of this type for an Italian resident would incur a 25% overseas one-off tax charge.
Having stated this, given the prospect of paying a 25% overseas tax charge for moving your pension outside the UK versus 40% IHT on the fund in the UK, the former might be the better option. I am currently planning this action with some clients. This only makes sense where you have qualified as a non-UK long-term resident for IHT purposes.
A simple comparison between UK and Italian IHT
It is well known that Italy is a fiscal paradise from an inheritance tax point of view. They prefer to tax during life, but are very light on inheritance tax.
Whereas the UK will typically tax 40% on anything over £325,000 — the nil-rate allowance (plus an extra £325,000 for a spouse and a further £150,000 for primary house relief), Italy by comparison charges a mere 4% where the transfer is made between spouses and/or children, but the spouse and children each get a €1 million allowance (franchigia) before the 4% applies. In addition, the house price is based on the cadastral value (and not the market value) and so is much lower. Not only that, but if you structure assets correctly using an insurance portfolio wrapper, you can actually place any amount in the product and it does not enter into your estate for the purposes of making the estate value calculation.
For a family of 2 children and 1 spouse, you would pay just 4% on an estate over €3 million in value, plus the availability of any sum in an insurance portfolio wrapper without inheritance tax applied. Clearly, with some sensible planning, it is possible to reduce your estate dues to near zero in Italy.
Getting the right last will and testament in place
This all sounds very attractive, but what about the forced succession laws in Italy? If you are no longer subject to UK law, then how can you plan to leave your estate to your chosen beneficiaries?
Well, if you are an Italian citizen, then you probably don’t have a choice, but would be best speaking to a lawyer to determine if this is the case. But if you haven’t taken citizenship, then European law may allow you to nominate your home jurisdiction’s administrative law to distribute your assets to your chosen beneficiaries.
So, once again, with some careful planning you can probably even avoid Italian forced heirship rules. This is the realm of a good lawyer, and you would need to have a correctly worded will. Always take legal advice when considering your will planning options.
I wrote an interesting blog post on planning around the 7% pensionati tax regime in Italy. It was put into place in 2019 to challenge the Portuguese non-resident tax regime and has had limited take-up to date, but has become more interesting since April due to a change in the rules.
If you are interested in learning more about it, and more importantly the financial planning tricks, then you can read my post HERE.
