On 28 February 2008, HMRC published the draft legislation (with accompanying explanatory notes and frequently asked questions) which is intended to implement the new relief for entrepreneurs.

The draft legislation is based on the rules for the former CGT retirement relief and reflects HMRC's press release issued on 24 January 2008. The following important issues are clarified:

1. The £1 million lifetime cap on the amount of qualifying capital gains will only include gains realised after 5 April 2008.

2. No transitional measures have been introduced that would allow taxpayers to apply the existing taper relief regime retrospectively. However, taxpayers with certain deferred gains may elect to claim entrepreneurs' relief retrospectively but only if the taxpayer would have been entitled to claim entrepreneurs' relief had it been available when the disposal giving rise to the deferred gain occurred. If such an election is made, the relief claimed will reduce the £1 million lifetime allowance.

3. The new relief is unlikely to benefit taxpayers who have exchanged their shares for non-qualifying corporate bonds (non-QCBs). However, for exchanges that occur on or after 6 April 2008, taxpayers will be able to elect to trigger a disposal at the time of the exchange. This will be beneficial if a disposal of the shares would have qualified for relief but a disposal or redemption of the non-QCBs would not. However, triggering a disposal may give rise to cashflow issues if the tax charge arises before the loan notes are redeemed or disposed of. Taxpayers who acquire their non-QCB loan notes on an exchange occurring before 6 April 2008 will not be able to elect in this way and so are unlikely to qualify for relief.