It sounds like Reward Flight Saver isn't being applied. That usually means it's yet another problem with BA's IT, or that you aren't eligible for RFS as you haven't earned any Avios in the last year.

BTW the highest Avios + least money option generally provides poor value - at 1p per Avios 40,000 Avios + £2 works out at £402.

You would be better off using one of the middle or lower options, e.g. 16,000 Avios + £145 works out at the equivalent of £305.