diff --git a/ChangeLog.md b/ChangeLog.md
index 6075806e10c..2ab6a05bffb 100644
--- a/ChangeLog.md
+++ b/ChangeLog.md
@@ -105,6 +105,7 @@ These artifacts include extensions for the types available in the latter JDKs, s
 - [`KT-13630`](https://youtrack.jetbrains.com/issue/KT-13630) Do not show Change Signature dialog when applying "Remove parameter" quick-fix
 - Re-highlight only single function after local modifications
 - [`KT-13474`](https://youtrack.jetbrains.com/issue/KT-13474) Fix performance of typing super call lambda
+- Show "Variables and values captured in a closure" highlighting only for usages
 
 #### Intention actions, inspections and quickfixes
 
diff --git a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/KotlinChangeLocalityDetector.kt b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/KotlinChangeLocalityDetector.kt
index adede6ab4d4..ab1090272c2 100644
--- a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/KotlinChangeLocalityDetector.kt
+++ b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/KotlinChangeLocalityDetector.kt
@@ -25,8 +25,6 @@ class KotlinChangeLocalityDetector : ChangeLocalityDetector {
     override fun getChangeHighlightingDirtyScopeFor(element: PsiElement): PsiElement? {
         val parent = element.parent
         if (element is KtBlockExpression && parent is KtNamedFunction && parent.name != null) {
-            // Do nothing for local functions because of at least WRAPPED_INTO_REF highlighting
-
             if (parent.parents.all { it is KtClassBody || it is KtClassOrObject || it is KtFile || it is KtScript }) {
                 return parent
             }
diff --git a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/VariablesHighlightingVisitor.kt b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/VariablesHighlightingVisitor.kt
index 105cdccd6d4..205f3f1d9bd 100644
--- a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/VariablesHighlightingVisitor.kt
+++ b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/highlighter/VariablesHighlightingVisitor.kt
@@ -18,6 +18,7 @@ package org.jetbrains.kotlin.idea.highlighter
 
 import com.intellij.lang.annotation.AnnotationHolder
 import com.intellij.psi.PsiElement
+import com.intellij.psi.PsiNameIdentifierOwner
 import org.jetbrains.kotlin.descriptors.DeclarationDescriptor
 import org.jetbrains.kotlin.descriptors.ValueParameterDescriptor
 import org.jetbrains.kotlin.descriptors.VariableDescriptor
@@ -145,7 +146,11 @@ internal class VariablesHighlightingVisitor(holder: AnnotationHolder, bindingCon
                     "Wrapped into a reference object to be modified when captured in a closure"
                 else
                     "Value captured in a closure"
-                holder.createInfoAnnotation(elementToHighlight, msg).textAttributes = WRAPPED_INTO_REF
+
+                val parent = elementToHighlight.parent
+                if (!(parent is PsiNameIdentifierOwner && parent.nameIdentifier == elementToHighlight)) {
+                    holder.createInfoAnnotation(elementToHighlight, msg).textAttributes = WRAPPED_INTO_REF
+                }
             }
 
             if (descriptor is LocalVariableDescriptor && descriptor !is SyntheticFieldDescriptor) {
diff --git a/idea/src/org/jetbrains/kotlin/idea/highlighter/KotlinColorSettingsPage.kt b/idea/src/org/jetbrains/kotlin/idea/highlighter/KotlinColorSettingsPage.kt
index 3a4ea6a8f75..3715e121076 100644
--- a/idea/src/org/jetbrains/kotlin/idea/highlighter/KotlinColorSettingsPage.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/highlighter/KotlinColorSettingsPage.kt
@@ -48,7 +48,7 @@ class KotlinColorSettingsPage : ColorSettingsPage {
         val <LOCAL_VARIABLE>ints</LOCAL_VARIABLE> = java.util.<CONSTRUCTOR_CALL>ArrayList</CONSTRUCTOR_CALL><Int?>(2)
         <LOCAL_VARIABLE>ints</LOCAL_VARIABLE>[0] = 102 + <PARAMETER><VARIABLE_AS_FUNCTION_CALL>f</VARIABLE_AS_FUNCTION_CALL></PARAMETER>() + <PARAMETER><VARIABLE_AS_FUNCTION_LIKE_CALL>fl</VARIABLE_AS_FUNCTION_LIKE_CALL></PARAMETER>()
         val <LOCAL_VARIABLE>myFun</LOCAL_VARIABLE> = <FUNCTION_LITERAL_BRACES_AND_ARROW>{</FUNCTION_LITERAL_BRACES_AND_ARROW> <FUNCTION_LITERAL_BRACES_AND_ARROW>-></FUNCTION_LITERAL_BRACES_AND_ARROW> "" <FUNCTION_LITERAL_BRACES_AND_ARROW>}</FUNCTION_LITERAL_BRACES_AND_ARROW>;
-        var <LOCAL_VARIABLE><MUTABLE_VARIABLE><WRAPPED_INTO_REF>ref</WRAPPED_INTO_REF></MUTABLE_VARIABLE></LOCAL_VARIABLE> = <LOCAL_VARIABLE>ints</LOCAL_VARIABLE>.<INSTANCE_PROPERTY>size</INSTANCE_PROPERTY>
+        var <LOCAL_VARIABLE><MUTABLE_VARIABLE>ref</MUTABLE_VARIABLE></LOCAL_VARIABLE> = <LOCAL_VARIABLE>ints</LOCAL_VARIABLE>.<INSTANCE_PROPERTY>size</INSTANCE_PROPERTY>
         ints.<EXTENSION_PROPERTY>lastIndex</EXTENSION_PROPERTY> + <PACKAGE_PROPERTY>globalCounter</PACKAGE_PROPERTY>
         <LOCAL_VARIABLE>ints</LOCAL_VARIABLE>.<EXTENSION_FUNCTION_CALL>forEach</EXTENSION_FUNCTION_CALL> <LABEL>lit@</LABEL> <FUNCTION_LITERAL_BRACES_AND_ARROW>{</FUNCTION_LITERAL_BRACES_AND_ARROW>
             if (<FUNCTION_LITERAL_DEFAULT_PARAMETER>it</FUNCTION_LITERAL_DEFAULT_PARAMETER> == null) return<LABEL>@lit</LABEL>
diff --git a/idea/testData/checker/infos/CapturedConstructorParameter.kt b/idea/testData/checker/infos/CapturedConstructorParameter.kt
index f1fa2f51dc5..800961a10dc 100644
--- a/idea/testData/checker/infos/CapturedConstructorParameter.kt
+++ b/idea/testData/checker/infos/CapturedConstructorParameter.kt
@@ -30,10 +30,10 @@ class A2<T>(x: Int, y: Int, t: T) {
 //captured
 
 class B(
-        <info descr="Value captured in a closure">x</info>: Int,
-        <info descr="Value captured in a closure">y</info>: Int,
-        <info descr="Value captured in a closure">t</info>: Int,
-        <info descr="Value captured in a closure">d</info>: Int
+        x: Int,
+        y: Int,
+        t: Int,
+        d: Int
 ) {
     <info>init</info> {
         class C(<warning>a</warning>: Int = <info>x</info>): T <info>by</info> T1(<info>t</info>) {
@@ -43,7 +43,7 @@ class B(
     }
 }
 
-class B2(<info descr="Value captured in a closure">x</info>: Int, <info descr="Value captured in a closure">y</info>: Int) {
+class B2(x: Int, y: Int) {
 
     val x1 =  { <info>x</info> }()
     <info>init</info> {
diff --git a/idea/testData/checker/infos/CapturedInInlinedClosure.kt b/idea/testData/checker/infos/CapturedInInlinedClosure.kt
index fd43e2c133b..c292c765c4b 100644
--- a/idea/testData/checker/infos/CapturedInInlinedClosure.kt
+++ b/idea/testData/checker/infos/CapturedInInlinedClosure.kt
@@ -20,45 +20,45 @@ fun inline() {
 }
 
 fun notInline() {
-    val <info descr="Value captured in a closure">y2</info> = 1
+    val y2 = 1
     run { <info descr="Value captured in a closure">y2</info> }
     run2 { <warning><info descr="Value captured in a closure">y2</info></warning> }
 
-    val <info descr="Value captured in a closure">y3</info> = 1
+    val y3 = 1
     run2 { <warning><info descr="Value captured in a closure">y3</info></warning> }
     run { <info descr="Value captured in a closure">y3</info> }
 
     // wrapped, using in not inline
-    val <info descr="Value captured in a closure">z</info> = 2
+    val z = 2
     { <info descr="Value captured in a closure">z</info> }()
 
-    val <info descr="Value captured in a closure">z1</info> = 3
+    val z1 = 3
     run2 { <warning><info descr="Value captured in a closure">z1</info></warning> }
 }
 
 fun nestedDifferent() { // inline within non-inline and vice-versa
-    val <info descr="Value captured in a closure">y</info> = 1
+    val y = 1
     {
         run {
             <info descr="Value captured in a closure">y</info>
         }
     }()
 
-    val <info descr="Value captured in a closure">y1</info> = 1
+    val y1 = 1
     run {
         { <info descr="Value captured in a closure">y1</info> }()
     }
 }
 
 fun localFunctionAndClass() {
-    val <info descr="Value captured in a closure">u</info> = 1
+    val u = 1
     fun localFun() {
         run {
             <info descr="Value captured in a closure">u</info>
         }
     }
 
-    val <info descr="Value captured in a closure">v</info> = 1
+    val v = 1
     class LocalClass {
         fun f() {
             run {
@@ -69,7 +69,7 @@ fun localFunctionAndClass() {
 }
 
 fun objectExpression() {
-    val <info descr="Value captured in a closure">u1</info> = 1
+    val u1 = 1
     object : Any() {
         fun f() {
             run {
@@ -78,14 +78,14 @@ fun objectExpression() {
         }
     }
 
-    val <info descr="Value captured in a closure">u2</info> = 1
+    val u2 = 1
     object : Any() {
         val prop = run {
             <info descr="Value captured in a closure">u2</info>
         }
     }
 
-    val <info descr="Value captured in a closure">u3</info> = ""
+    val u3 = ""
     object : Throwable(run { <info descr="Value captured in a closure">u3</info> }) {
     }
 }
@@ -95,7 +95,7 @@ fun objectExpression() {
     task2()
 }
 
-fun usage(<info descr="Value captured in a closure">param1</info>: Int, param2: Int) {
+fun usage(param1: Int, param2: Int) {
     withNoInlineParam({ println(<info descr="Value captured in a closure">param1</info>) }, { println(param2) })
 }
 
diff --git a/idea/testData/checker/infos/SmartCasts.kt b/idea/testData/checker/infos/SmartCasts.kt
index a3024e6236e..24ff66f5828 100644
--- a/idea/testData/checker/infos/SmartCasts.kt
+++ b/idea/testData/checker/infos/SmartCasts.kt
@@ -184,11 +184,11 @@ fun vars(a: Any?) {
         <warning>b =</warning> <info descr="Smart cast to kotlin.Int">a</info>
     }
 }
-fun returnFunctionLiteralBlock(<info>a</info>: Any?): Function0<Int> {
+fun returnFunctionLiteralBlock(a: Any?): Function0<Int> {
     if (<info>a</info> is Int) return { <info descr="Smart cast to kotlin.Int"><info>a</info></info> }
     else return { 1 }
 }
-fun returnFunctionLiteral(<info>a</info>: Any?): Function0<Int> =
+fun returnFunctionLiteral(a: Any?): Function0<Int> =
     if (<info>a</info> is Int) (fun (): Int = <info descr="Smart cast to kotlin.Int"><info>a</info></info>)
     else { -> 1 }
 
@@ -212,7 +212,7 @@ fun mergeSmartCasts(a: Any?) {
 
 //mutability
 fun f(): String {
-    var <info>a</info>: Any = 11
+    var a: Any = 11
     if (<info>a</info> is String) {
         val <warning>i</warning>: String = <info descr="Smart cast to kotlin.String"><info descr="Wrapped into a reference object to be modified when captured in a closure">a</info></info>
         <info descr="Smart cast to kotlin.String"><info descr="Wrapped into a reference object to be modified when captured in a closure">a</info></info>.compareTo("f")
diff --git a/idea/testData/checker/infos/WrapIntoRef.kt b/idea/testData/checker/infos/WrapIntoRef.kt
index 93458833d84..94fcb64eb9a 100644
--- a/idea/testData/checker/infos/WrapIntoRef.kt
+++ b/idea/testData/checker/infos/WrapIntoRef.kt
@@ -1,36 +1,36 @@
 fun refs() {
-    var <info><warning>a</warning></info> = 1
+    var <warning>a</warning> = 1
     val <warning>v</warning> = {
       <info>a</info> = 2
     }
 
-    var <info><warning>x</warning></info> = 1
+    var <warning>x</warning> = 1
     val <warning>b</warning> = object {
         fun foo() {
             <info>x</info> = 2
         }
     }
 
-    var <info><warning>y</warning></info> = 1
+    var <warning>y</warning> = 1
     fun foo() {
         <info>y</info> = 1
     }
 }
 
 fun refsPlusAssign() {
-    var <info>a</info> = 1
+    var a = 1
     val <warning>v</warning> = {
       <info>a</info> += 2
     }
 
-    var <info>x</info> = 1
+    var x = 1
     val <warning>b</warning> = object {
         fun foo() {
             <info>x</info> += 2
         }
     }
 
-    var <info>y</info> = 1
+    var y = 1
     fun foo() {
         <info>y</info> += 1
     }