Clarification of Ebay increments?

I'm not new to E-bay, but need clarifiction on how bidding increments work. Lets look at the following scanario :

An item is listed with an opening bid of £200

Bidder (A) places a bid of £200. The item goes to £200 and Bidder A is the highest Bidder.

Bidder (B) places a bid of £400. Bidder B is the new high bidder and the price goes to £205 (£5 increment for items within this price range)

Bidder (A) realises he/she has been outbid and tries to outbid bidder (B) by placing a bid of £500 on the item

Bidder (A) is now the highest bidder but.....

Does the price of the item go up by another £5 to £210

or

Does the price go up to £405 to outbid bidder B's maximum.

I've read the e-bay rules on bidding but it doesn't make it clear, although it does say that bid increments can be greater to outbid somebody.

Thanks