The main advantage of an ISA over a normal bank account is the tax exemption. The money you put into an ISA is from your after-tax income but when you withdraw money you do not pay any income or capital gains tax. The interest generated is also tax-free. Today, there have been six types of ISA: Cash, Lifetime, Stocks & Shares, Innovative Finance, Help-To-Buy and Junior. The first four are available to adults to make use of today, with help-to-buy no longer being available and the Junior ISA for under eighteens only. It may be difficult to understand which ISA is best for you, this blog post will explain all of the different types so that you can make an informed decision.
If you intend to purchase a house one day, you need to know about the Lifetime ISA. The Lifetime ISA is a tax-free individual savings account that can, and should only, be used for purchasing a house, withdrawing after retirement (your 60th birthday), or if you are terminally ill with less than 12 months to live. The UK government will add a 25% bonus onto your savings up to £4,000 every tax year.