diff --git a/src/handlers/update-xero-bank-transaction.handler.test.ts b/src/handlers/update-xero-bank-transaction.handler.test.ts
new file mode 100644
index 00000000..acd8aad0
--- /dev/null
+++ b/src/handlers/update-xero-bank-transaction.handler.test.ts
@@ -0,0 +1,107 @@
+import { beforeEach, describe, expect, it, vi } from "vitest";
+import { BankTransaction } from "xero-node";
+
+const authenticateMock = vi.fn();
+const getBankTransactionMock = vi.fn();
+const updateBankTransactionMock = vi.fn();
+const getClientHeadersMock = vi.fn(() => ({ "x-test": "header" }));
+
+vi.mock("../clients/xero-client.js", () => ({
+  xeroClient: {
+    tenantId: "tenant-123",
+    authenticate: authenticateMock,
+    accountingApi: {
+      getBankTransaction: getBankTransactionMock,
+      updateBankTransaction: updateBankTransactionMock,
+    },
+  },
+}));
+
+vi.mock("../helpers/get-client-headers.js", () => ({
+  getClientHeaders: getClientHeadersMock,
+}));
+
+describe("updateXeroBankTransaction", () => {
+  beforeEach(() => {
+    vi.clearAllMocks();
+  });
+
+  it("sends a minimal update payload when line items are provided", async () => {
+    const existingBankTransaction: Partial<BankTransaction> = {
+      bankTransactionID: "btx-123",
+      reference: "old-ref",
+      date: "2026-06-01",
+      lineItems: [
+        {
+          description: "Old item",
+          quantity: 1,
+          unitAmount: 10,
+          accountCode: "200",
+          taxType: "NONE",
+        },
+      ],
+      status: BankTransaction.StatusEnum.AUTHORISED,
+    };
+
+    const newLineItems = [
+      {
+        description: "Updated item",
+        quantity: 2,
+        unitAmount: 25,
+        accountCode: "310",
+        taxType: "OUTPUT2",
+      },
+    ];
+
+    getBankTransactionMock.mockResolvedValue({
+      body: { bankTransactions: [existingBankTransaction] },
+    });
+    updateBankTransactionMock.mockResolvedValue({
+      body: {
+        bankTransactions: [
+          {
+            bankTransactionID: "btx-123",
+            lineItems: newLineItems,
+          },
+        ],
+      },
+    });
+
+    const { updateXeroBankTransaction } = await import(
+      "./update-xero-bank-transaction.handler.js"
+    );
+
+    const result = await updateXeroBankTransaction(
+      "btx-123",
+      undefined,
+      undefined,
+      newLineItems,
+      "new-ref",
+      "2026-06-12",
+    );
+
+    expect(result.isError).toBe(false);
+    expect(authenticateMock).toHaveBeenCalledTimes(1);
+    expect(updateBankTransactionMock).toHaveBeenCalledWith(
+      "tenant-123",
+      "btx-123",
+      {
+        bankTransactions: [
+          {
+            lineItems: newLineItems,
+            reference: "new-ref",
+            date: "2026-06-12",
+          },
+        ],
+      },
+      undefined,
+      undefined,
+      { "x-test": "header" },
+    );
+
+    const payload = updateBankTransactionMock.mock.calls[0][2].bankTransactions[0];
+    expect(payload).not.toHaveProperty("status");
+    expect(payload).not.toHaveProperty("currencyCode");
+    expect(payload).not.toHaveProperty("bankTransactionID");
+  });
+});
diff --git a/src/handlers/update-xero-bank-transaction.handler.ts b/src/handlers/update-xero-bank-transaction.handler.ts
index 8dfdd529..043f72af 100644
--- a/src/handlers/update-xero-bank-transaction.handler.ts
+++ b/src/handlers/update-xero-bank-transaction.handler.ts
@@ -29,7 +29,6 @@ async function getBankTransaction(bankTransactionId: string): Promise<BankTransa
 
 async function updateBankTransaction(
   bankTransactionId: string,
-  existingBankTransaction: BankTransaction,
   type?: BankTransactionType,
   contactId?: string,
   lineItems?: BankTransactionLineItem[],
@@ -37,13 +36,11 @@ async function updateBankTransaction(
   date?: string
 ): Promise<BankTransaction | undefined> {
   const bankTransaction: BankTransaction = {
-    ...existingBankTransaction,
-    bankTransactionID: bankTransactionId,
-    type: type ? BankTransaction.TypeEnum[type] : existingBankTransaction.type,
-    contact: contactId ? { contactID: contactId } : existingBankTransaction.contact,
-    lineItems: lineItems ? lineItems : existingBankTransaction.lineItems,
-    reference: reference ? reference : existingBankTransaction.reference,
-    date: date ? date : existingBankTransaction.date
+    ...(type ? { type: BankTransaction.TypeEnum[type] } : {}),
+    ...(contactId ? { contact: { contactID: contactId } } : {}),
+    ...(lineItems ? { lineItems } : {}),
+    ...(reference ? { reference } : {}),
+    ...(date ? { date } : {}),
   };
 
   const response = await xeroClient.accountingApi.updateBankTransaction(
@@ -75,7 +72,6 @@ export async function updateXeroBankTransaction(
 
     const updatedBankTransaction = await updateBankTransaction(
       bankTransactionId,
-      existingBankTransaction,
       type,
       contactId,
       lineItems,
@@ -99,4 +95,4 @@ export async function updateXeroBankTransaction(
       error: formatError(error),
     };
   }
-}
\ No newline at end of file
+}