AbstractThe two‐fluid single‐column model of Thuburn et al. (Quart. J. R. Meteorol. Soc., 2019, 145, 1535–1550) is extended to include moisture and horizontal wind shear. Turbulent kinetic energy is introduced as a prognostic variable, dependence on a diagnosed boundary‐layer height is removed, and subfilter fluxes are approximated using a two‐fluid version of a Mellor–Yamada scheme. Three mechanisms for entrainment and detrainment processes are introduced, which represent entrainment of unstable air at the surface, forced detrainment of air at the top of the boundary/cloud layers, and turbulent mixing that relaxes the convective fluid to a reference profile. A semi‐implicit Eulerian discretization replaces the semi‐implicit semi‐Lagrangian implementation of Thuburn et al. (Quart. J. R. Meteorol. Soc., 2019, 145, 1535–1550) to improve numerical stability and conservation. The equations for the implicit time step are solved using a quasi‐Newton method, which is shown to perform well in numerical tests for conservation and convergence. The two‐fluid single‐column model presented in this article will be applied to simulations of shallow cumulus convection in Part III.