UK tax question

I have opened my first ever ISA and am confused by the tax implications.

I am 38 and want to save for the long term, ideally until I’m 60. I am putting £100 a month in and don’t plan on taking any money out.

My basic understanding is that I am allowed to save up to £20k a year tax free. Obviously I won’t be anywhere near that number for a fair few years but when I do exceed that threshold this is where I am confused.

Ideally, I would want to save, save and save until I am 60 but then would I be taxed a chunk when taking it all out in one go. Nearer the end term would I be better to withdraw £20k a year for a number of years to avoid paying tax?

Im so confused and have looked for answers online but this only leads to more confusion.

Can anybody give me some help please. Thx.

The present rules are that you can add new money up to £20k per year. Dividends and capital growth do not count towards that limit. All withdrawals are completely tax free.

Government can change rules at any time but has to think about anger of voters if rules were to become less advantageous.

The £20k is only to do with how much you can contribute to that pot of money each tax year.

So say this tax year you put in £1200 (12*100) you have had £18800 remaining.

Next year that remaining £18800 gets reset back to £20k

So next year you bump it to £200 monthly and manage to contribute £2400 to it, remaining would be £17,600.

In your pot you now have £3600.

The limit is reset back to £20k again.

The next year you come into £5k lump sum so you add that in (£8600 total), and you’ll have up £15k remaining that year so adding anything else.

And so on.

If one year you have £20k to contribute and £0 remaining. You’ll need to wait for the next year for it to reset before adding more to it.

Better you go with a life time ISA no?

Not necessarily, buying a first home, def yes.

If you have a workplace pension that’s more likely to be better than a LISA for retirement imo.

Thank you all for the answers and for clearing up my newbie confusion.