How has IRIS calculated the figure of Entrepreneur's Relief (2010 and earlier)

For 2010 and earlier years, IRIS calculates Entrepreneur’s Relief automatically as 4/9ths of the gain; this gives an effective rate of tax of 10%. Entrepreneur’s relief will be given before any capital losses and the annual exemption and will need to be claimed. Example calculation The client has sold shares in thier trading company and they realise a gain of £1 million. This was the clients only gain in they year so the full amount is reduced by 4/9 (£444,444) and the remaining gain would therefore be £555,556(which is 5/9th of total gain). Assuming no capital losses and ignoring the annual exemption this would then be taxed at 18% with the CGT being £100,000.