Using Ubuntu 20.04 in VS code

When I open my VS code it's currently starting a terminal using Ubuntu 18 on WSL2.

I want to update it to Ubuntu 20 and I think I have installed it correctly as when I runlsb_release -aI get:

Distributor ID: UbuntuDescription:    Ubuntu 20.04.5 LTSRelease:        20.04Codename:       focal

But if I try to open a terminal and select 'new distro' it only shows 18.

Due to restrictions on my work laptop I can't install a ubuntu through the microsoft store as VS code suggests. Is there a way of doing this all through the terminal?