iCloud Backup New Phone

My wife got a new iPhone 12 and has retired her iPhone 8. The iPhone 8 has been reset and is ready to send as the trade-in. However, the new phone says it cannot back up because there is not enough space on iCloud (we pay for her to have 50GB). I believe the last backup of the old phone is there, and hence the Cloud sees the new phone as a new backup, and hence there isn't enough space.

iCloud only sees the new iPhone 12, it seems, and not two devices, but how can I get rid of the current backup entirely so that we have the space back for the backups of the new phone? I logged into her iCloud but cannot see any option that seems right for this, and I don't want to screw anything up!

She keeps the phone well below the 50GB limit, but apparently it will go over if the cloud takes a backup of her new phone with everything else from her old phone seemingly still being there.

Thanks for the help!!

Tim