diff --git a/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala b/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
index 5680df476f8d..a2d2d2cf358c 100644
--- a/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
+++ b/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
@@ -264,7 +264,9 @@ extension (tp: Type)
   def boxed(using Context): Type = tp.dealias match
     case tp @ CapturingType(parent, refs) if !tp.isBoxed && !refs.isAlwaysEmpty =>
       tp.annot match
-        case ann: CaptureAnnotation => AnnotatedType(parent, ann.boxedAnnot)
+        case ann: CaptureAnnotation =>
+          assert(!parent.derivesFrom(defn.Caps_CapSet))
+          AnnotatedType(parent, ann.boxedAnnot)
         case ann => tp
     case tp: RealTypeBounds =>
       tp.derivedTypeBounds(tp.lo.boxed, tp.hi.boxed)
diff --git a/compiler/src/dotty/tools/dotc/cc/CapturingType.scala b/compiler/src/dotty/tools/dotc/cc/CapturingType.scala
index bb79e52f1060..9f9b923b2c88 100644
--- a/compiler/src/dotty/tools/dotc/cc/CapturingType.scala
+++ b/compiler/src/dotty/tools/dotc/cc/CapturingType.scala
@@ -33,6 +33,7 @@ object CapturingType:
    *  boxing status is the same or if A is boxed.
    */
   def apply(parent: Type, refs: CaptureSet, boxed: Boolean = false)(using Context): Type =
+    assert(!boxed || !parent.derivesFrom(defn.Caps_CapSet))
     if refs.isAlwaysEmpty && !refs.keepAlways then parent
     else parent match
       case parent @ CapturingType(parent1, refs1) if boxed || !parent.isBoxed =>
diff --git a/compiler/src/dotty/tools/dotc/cc/Setup.scala b/compiler/src/dotty/tools/dotc/cc/Setup.scala
index c048edfb2102..25d50052f107 100644
--- a/compiler/src/dotty/tools/dotc/cc/Setup.scala
+++ b/compiler/src/dotty/tools/dotc/cc/Setup.scala
@@ -134,9 +134,10 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
   private def box(tp: Type)(using Context): Type =
     def recur(tp: Type): Type = tp.dealiasKeepAnnotsAndOpaques match
       case tp @ CapturingType(parent, refs) =>
-        if tp.isBoxed then tp else tp.boxed
+        if tp.isBoxed || parent.derivesFrom(defn.Caps_CapSet) then tp
+        else tp.boxed
       case tp @ AnnotatedType(parent, ann) =>
-        if ann.symbol.isRetains
+        if ann.symbol.isRetains && !parent.derivesFrom(defn.Caps_CapSet)
         then CapturingType(parent, ann.tree.toCaptureSet, boxed = true)
         else tp.derivedAnnotatedType(box(parent), ann)
       case tp1 @ AppliedType(tycon, args) if defn.isNonRefinedFunction(tp1) =>
@@ -605,8 +606,10 @@ class Setup extends PreRecheck, SymTransformer, SetupAPI:
         !refs.isEmpty
       case tp: (TypeRef | AppliedType) =>
         val sym = tp.typeSymbol
-        if sym.isClass then !sym.isPureClass
-        else instanceCanBeImpure(tp.superType)
+        if sym.isClass
+        then !sym.isPureClass
+        else !tp.derivesFrom(defn.Caps_CapSet) // CapSet arguments don't get other capture set variables added
+          && instanceCanBeImpure(tp.superType)
       case tp: (RefinedOrRecType | MatchType) =>
         instanceCanBeImpure(tp.underlying)
       case tp: AndType =>
diff --git a/tests/pos/polycap.scala b/tests/pos/polycap.scala
new file mode 100644
index 000000000000..684f46454595
--- /dev/null
+++ b/tests/pos/polycap.scala
@@ -0,0 +1,14 @@
+import language.experimental.captureChecking
+
+class Source[+T, Cap^]
+
+def completed[T, Cap^](result: T): Source[T, Cap] =
+  //val fut = new Source[T, Cap]()
+  val fut2 = new Source[T, Cap]()
+  fut2: Source[T, Cap]
+
+
+
+
+
+