I have 3.8 GB storage available and it won’t update

Generally at least 6 GB or more is recommended.

If you need more space for an update read this support article --> If you need more space for an update on your iPhone, iPad, or iPod touch - Apple Support

If you can't free up space, use a computer. Update iPadOS - Apple Support

Undoubtedly the 3.55 is needed to contain the update. It does not consider the working storage required.

Again, 6GB free should be considered an absolute minimum requirement at all times.

You need an absolute minimum of 6GB free at all times.