Keyboard layout not respected (swapping right of left-shift and above tab)

My input source is British (English -> ABC). This means the key to the right of the left-shift should be a backtick, and the key above tab should be the section symbol, however these are switched. This is true for my MacBook Pro's internal keyboard and my ISO Magic Keyboard (on which I've selected ISO keyboard layout).

Changing keyboard layouts does change the behaviour, but these two keys (right of left-shift and above tab) are still switched. For British - PC layout: right of left-shift = backtick and above tab = backslash (backwards for this kayboard layout).

I believe this started after I updated to Sequoia.

Something odd that might be related: I tried changing the keyboard type and in the wizard when I press the key right of left-shift it says "Your keyboard cannot be identified. You have pressed a key on your Apple keyboard. Please press the keys on the keyboard that can't be identified." (image attached). I skipped and manually selected as ISO.