Bluetooth Keyboard Issue

I have an iPad Air with a Logitech keyboard and it was working fine, onscreen keyboard hid as soon at it was turned on, until the latest update. Now when I turn the keyboard on, the onscreen keyboard stays visible and pressing the down arrow in the bottom right hand corner will hide it, but then it will not allow me to type at all, Logitech or onscreen. I have to touch the screen where I want to type which then makes the onscreen keyboard appear again which covers half my screen. I would like the onscreen keyboard to be visible when I am not using my keyboard, and the onscreen keyboard to hide when I am using my Logitech keyboard.

Is this a known problem with the current iOS 8.1.1? Does anyone know if there is a setting somewhere that I am missing?

Thanks in advance,

Jenn.