Q: I had a small balance of £4.50 in my account. I redeemed a £20 gift card and the new balance showed as £20. Question: what happened to the original £4.50?

Have you tried logging out and back into your iTunes account on the device/computer that you are using and seeing if your balance then shows the correct amount ?

If not, and you didn't have any pre-orders or auto-renewing subscriptions that were due, then you could try contacting iTunes Support and see if they know where it went (we are fellow users here on these forums) : http://www.apple.com/support/itunes/contact/ - click on Contact iTunes Store Support on the right-hand side of the page, then Purchases, Billing & Redemption