Say a UK tax-payer is in the higher tax brackets for taxes. They will pay 20% on their capital gains, and 38% on their dividend gains.
It seems to me that it is strictly worse to use dividend paying ETF or funds rather than non-dividend paying ones? If money is needed, some of the holdings could be sold, and the taxes would be less.
Given that I think most of the ETFs and funds (at least the biggest) pay significant dividend (say around 2%) I feel that I am missing something. Can anyone let me know why I should not always invest in ETFs/funds that do not pay dividend, but instead increase their value?