We are often asked by clients whether they need to include details of their inheritance on a personal Tax Return in the year in which they receive the cash or property. The simple answer is no, but you may have to do so on a later Tax Return depending upon what you do with that inheritance.
If the inheritance or legacy is cash and you decide to invest it in shares, the likelihood is that you will receive dividends in the future which will need to be included in your Return. Were you to invest it in tax-free ISAs then you won't need to enter any interest from the ISAs on your Return - it's exempt!
A common form of inheritance is a late parent's house. If you as the beneficiary decide that you don't want to sell it but to rent it out then you'll need to include any rental income and expenses on your Return.
However if you want to sell the property, you may be liable to Capital Gains Tax (CGT) and will need to work out the difference between what you sell it for and its probate value. Subject to a deduction for the costs of sale (like estate agents and solicitor's fees) any profit or gain would be chargeable to CGT and need to be included on your Return. There is a valuable Annual Exemption (£11,100 for the current tax year) which can be used to set off against any gain.