diff --git a/CHANGELOG.md b/CHANGELOG.md
index f5a97a70..b5a402d4 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -12,6 +12,15 @@
 * General performance and memory usage improvements. (Akira Matsuda)
 * Don't treat the 'data' attribute specially when merging attribute hashes. (Matt Wildig and Norman Clarke)
 
+## 4.0.5
+
+Not released yet.
+
+* Fix for bug whereby when HAML :ugly option is "true",
+  ActionView::Helpers::CaptureHelper::capture returns the whole view buffer
+  when passed a block that returns nothing (thanks [Mircea
+  Moise](https://github.com/mmircea16)).
+
 ## 4.0.4
 
 Released on November 5, 2013 ([diff](https://github.com/haml/haml/compare/4.0.3...4.0.4)).
@@ -1349,3 +1358,4 @@ has been moved to [YARD](http://yard.soen.ca).
 YARD is an excellent documentation system,
 and allows us to write our documentation in [Maruku](http://maruku.rubyforge.org),
 which is also excellent.
+>>>>>>> External Changes
diff --git a/lib/haml/helpers.rb b/lib/haml/helpers.rb
index d5ada463..d2b6753e 100644
--- a/lib/haml/helpers.rb
+++ b/lib/haml/helpers.rb
@@ -372,25 +372,16 @@ MESSAGE
         position = haml_buffer.buffer.length
 
         haml_buffer.capture_position = position
-        block.call(*args)
+        value = block.call(*args)
 
         captured = haml_buffer.buffer.slice!(position..-1)
-        return captured if haml_buffer.options[:ugly]
-        # Note that the "reject" is needed for rbx 1.2.4, which includes empty
-        # strings in the returned array when splitting by /^/.
-        captured = captured.split(/^/)
-        captured.delete('')
 
-        min_tabs = nil
-        captured.each do |line|
-          tabs = line.index(/[^ ]/) || line.length
-          min_tabs ||= tabs
-          min_tabs = min_tabs > tabs ? tabs : min_tabs
+        if captured == '' and value != haml_buffer.buffer
+             captured = (value.is_a?(String) ? value : nil)
         end
 
-        captured.map do |line|
-          line.slice(min_tabs, line.length)
-        end.join
+        return nil if captured.nil?
+        return (haml_buffer.options[:ugly] ? captured : prettify(captured))
       end
     ensure
       haml_buffer.capture_position = nil
@@ -669,6 +660,22 @@ MESSAGE
       _erbout = _erbout = _hamlout.buffer
       proc { |*args| proc.call(*args) }
     end
+
+    def prettify(text)
+      text = text.split(/^/)
+      text.delete('')
+
+      min_tabs = nil
+      text.each do |line|
+        tabs = line.index(/[^ ]/) || line.length
+        min_tabs ||= tabs
+        min_tabs = min_tabs > tabs ? tabs : min_tabs
+      end
+
+      text.map do |line|
+        line.slice(min_tabs, line.length)
+      end.join
+    end
   end
 end
 
diff --git a/lib/haml/helpers/action_view_mods.rb b/lib/haml/helpers/action_view_mods.rb
index 0542859d..588b8e45 100644
--- a/lib/haml/helpers/action_view_mods.rb
+++ b/lib/haml/helpers/action_view_mods.rb
@@ -41,16 +41,9 @@ module ActionView
         if Haml::Helpers.block_is_haml?(block)
           #double assignment is to avoid warnings
           _hamlout = _hamlout = eval('_hamlout', block.binding) # Necessary since capture_haml checks _hamlout
-          value = nil
-          buffer = capture_haml(*args) { value = yield(*args) }
-          str =
-            if !buffer.empty?
-              buffer
-            elsif value.is_a?(String)
-              value
-            else
-              nil
-            end
+
+          str = capture_haml(*args, &block)
+
           # NonCattingString is present in Rails less than 3.1.0. When support
           # for 3.0 is dropped, this can be removed.
           return ActionView::NonConcattingString.new(str) if str && defined?(ActionView::NonConcattingString)
diff --git a/test/template_test.rb b/test/template_test.rb
index d6f16122..4d5674f1 100644
--- a/test/template_test.rb
+++ b/test/template_test.rb
@@ -111,6 +111,29 @@ class TemplateTest < MiniTest::Unit::TestCase
     end
   end
 
+  def test_render_method_returning_null_with_ugly
+    @base.instance_eval do
+      def empty
+        nil
+      end
+      def render_something(&block)
+        capture(self, &block)
+      end
+    end
+
+    content_to_render = "%h1 This is part of the broken view.\n= render_something do |thing|\n  = thing.empty do\n    = 'test'"
+    result = render(content_to_render, :ugly => true)
+    expected_result = "<h1>This is part of the broken view.</h1>\n"
+    assert_equal(expected_result, result)
+  end
+
+  def test_simple_rendering_with_ugly
+    content_to_render = "%p test\n= capture { 'foo' }"
+    result = render(content_to_render, :ugly => true)
+    expected_result = "<p>test</p>\nfoo\n"
+    assert_equal(expected_result, result)
+  end
+
   def test_templates_should_render_correctly_with_render_proc
     assert_renders_correctly("standard") do |name|
       engine = Haml::Engine.new(File.read(File.dirname(__FILE__) + "/templates/#{name}.haml"), :format => :xhtml)