diff --git a/compiler/src/dotty/tools/dotc/typer/CheckCaptures.scala b/compiler/src/dotty/tools/dotc/typer/CheckCaptures.scala
index 1415016fea26..69f184bd79ef 100644
--- a/compiler/src/dotty/tools/dotc/typer/CheckCaptures.scala
+++ b/compiler/src/dotty/tools/dotc/typer/CheckCaptures.scala
@@ -263,7 +263,12 @@ class CheckCaptures extends Recheck:
             case ref: TermRef => ref.symbol.enclosure != ownEnclosure
             case _ => true
           }
-        checkSubset(targetSet, curEnv.captured, pos)
+        def includeIn(env: Env) =
+          capt.println(i"Include call capture $targetSet in ${env.owner}")
+          checkSubset(targetSet, env.captured, pos)
+        includeIn(curEnv)
+        if curEnv.owner.isTerm && curEnv.outer.owner.isClass then
+          includeIn(curEnv.outer)
 
     def includeBoxedCaptures(tp: Type, pos: SrcPos)(using Context): Unit =
       if curEnv.isOpen then
diff --git a/tests/neg-custom-args/captures/nestedclass.check b/tests/neg-custom-args/captures/nestedclass.check
new file mode 100644
index 000000000000..d3912d417a4c
--- /dev/null
+++ b/tests/neg-custom-args/captures/nestedclass.check
@@ -0,0 +1,7 @@
+-- [E007] Type Mismatch Error: tests/neg-custom-args/captures/nestedclass.scala:15:15 ----------------------------------
+15 |  val xsc: C = xs  // error
+   |               ^^
+   |               Found:    (xs : {cap1} C)
+   |               Required: C
+
+longer explanation available when compiling with `-explain`
diff --git a/tests/neg-custom-args/captures/nestedclass.scala b/tests/neg-custom-args/captures/nestedclass.scala
new file mode 100644
index 000000000000..38adf7998868
--- /dev/null
+++ b/tests/neg-custom-args/captures/nestedclass.scala
@@ -0,0 +1,15 @@
+class CC
+type Cap = {*} CC
+
+abstract class C:
+  def head: String
+
+def test(cap1: Cap, cap2: Cap) =
+  def f(x: String): String = if cap1 == cap1 then "" else "a"
+  def g(x: String): String = if cap2 == cap2 then "" else "a"
+
+  val xs =
+    class Cimpl extends C:
+      def head = f("")
+    new Cimpl
+  val xsc: C = xs  // error