diff --git a/hydra-cluster/test/Test/Hydra/Cluster/HydraClientSpec.hs b/hydra-cluster/test/Test/Hydra/Cluster/HydraClientSpec.hs
index 4a624dab5c1..1bc31629483 100644
--- a/hydra-cluster/test/Test/Hydra/Cluster/HydraClientSpec.hs
+++ b/hydra-cluster/test/Test/Hydra/Cluster/HydraClientSpec.hs
@@ -16,7 +16,7 @@ import CardanoNode (
  )
 import Control.Lens ((^?))
 import Data.Aeson (Value (..), (.=))
-import Data.Aeson.Lens (key)
+import Data.Aeson.Lens (atKey, key)
 import Data.Set qualified as Set
 import Data.Text qualified as Text
 import Hydra.Cardano.Api hiding (Value, cardanoEra, queryGenesisParameters)
@@ -65,6 +65,10 @@ spec = around (showLogsOnFailure "HydraClientSpec") $ do
         failAfter 60 $
           withTempDir "hydra-client" $ \tmpDir ->
             filterConfirmedUTxOByWrongAddressScenario tracer tmpDir
+      it "should filter ALL in confirmed UTxO when given an address but using snapshot exclusion option" $ \tracer -> do
+        failAfter 60 $
+          withTempDir "hydra-client" $ \tmpDir ->
+            filterConfirmedUTxOByAddressWithExclusionScenario tracer tmpDir
 
 filterConfirmedUTxOByAddressScenario :: Tracer IO EndToEndLog -> FilePath -> IO ()
 filterConfirmedUTxOByAddressScenario tracer tmpDir = do
@@ -135,6 +139,20 @@ filterConfirmedUTxOByWrongAddressScenario tracer tmpDir = do
         utxo <- v ^? key "snapshot" . key "utxo"
         guard $ utxo == toJSON (mempty :: Map TxIn Value)
 
+filterConfirmedUTxOByAddressWithExclusionScenario :: Tracer IO EndToEndLog -> FilePath -> IO ()
+filterConfirmedUTxOByAddressWithExclusionScenario tracer tmpDir = do
+  scenarioSetup tracer tmpDir $ \node nodes hydraTracer -> do
+    (expectedSnapshotNumber, (aliceExternalVk, _)) <- prepareScenario node nodes tracer
+    let [n1, _, _] = toList nodes
+
+    runScenario hydraTracer n1 (textAddrOf aliceExternalVk <> "&snapshot-utxo=no") $ \con -> do
+      waitMatch 3 con $ \v -> do
+        guard $ v ^? key "tag" == Just "SnapshotConfirmed"
+        snapshotNumber <- v ^? key "snapshot" . key "number"
+        guard $ snapshotNumber == toJSON expectedSnapshotNumber
+        utxo <- v ^? key "snapshot" . atKey "utxo"
+        guard $ isNothing utxo
+
 -- * Helpers
 unwrapAddress :: AddressInEra -> Text
 unwrapAddress = \case
diff --git a/hydra-node/src/Hydra/API/ServerOutput.hs b/hydra-node/src/Hydra/API/ServerOutput.hs
index 51a9df145c0..b3517e11bd4 100644
--- a/hydra-node/src/Hydra/API/ServerOutput.hs
+++ b/hydra-node/src/Hydra/API/ServerOutput.hs
@@ -252,7 +252,7 @@ prepareServerOutput ServerOutputConfig{utxoInSnapshot, addressInSnapshot} respon
     SnapshotConfirmed{} ->
       encodedResponse
         & handleUtxoInclusion (key "snapshot" . atKey "utxo" .~ Nothing)
-        & handleAddressInclusion (\addr -> key "snapshot" . key "utxo" %~ filterEntries addr)
+        & handleAddressInclusion (\addr -> key "snapshot" . atKey "utxo" %~ filterEntries addr)
     GetUTxOResponse{} -> encodedResponse
     InvalidInput{} -> encodedResponse
     Greetings{} -> encodedResponse
@@ -278,7 +278,7 @@ prepareServerOutput ServerOutputConfig{utxoInSnapshot, addressInSnapshot} respon
       WithoutAddressedUTxO -> bs
 
   filterEntries addr = \case
-    Object utxoMap -> Object $ KeyMap.filter matchingAddress utxoMap
+    Just (Object utxoMap) -> Just . Object $ KeyMap.filter matchingAddress utxoMap
     other -> other
    where
     matchingAddress obj =