Green’s Dictionary of Slang

to beat all rivals, esp. with the implication that the person, announcement, event etc. is even more startling or appalling than might have been expected.

1886		Lantern (N.O.) 20 Oct. 3: For keeping away from trouble a peeler takes the cookie.
1890		Sporting Times 3 May 5/4: That extremely Catholic list of smart social functions, ‘To-day’s Arrangements,’ fairly won the biscuit on Thursday last.
1892		‘’Arry in ’Arrygate’ (Second Letter) in Punch 15 Oct. 169/3: I know ’Arrygate girls cop the biscuit for beauty.
1892		Sporting Times 9 Apr. 1/3: The Strong Man, who [...] bursts into tears and faints in the dock, takes the bun, the biscuit, the rusk and the entire bakery.
1904		G.B. Shaw John Bull’s Other Island Act III: You tike the biscuit at thet, you do.
1904		Sydney Sportsman (Surry Hills, NSW) 10 Aug. 3/2: [F]or such an offence ‘Ernest Knight’s English Dramatic Company’ [...] took the whole bakery.
1910		Wodehouse Psmith in the City (1993) 35: At the hard-headed, common-sense business you sneak the biscuit every time with ridiculous ease.
1914		Joyce ‘Two Gallants’ Dubliners (1956) 49: ‘Of all the good ones ever I heard,’ he said, ‘that emphatically takes the biscuit.’.
1922		Joyce Ulysses 312: Twenty to one, says Lenehan. Such is life in an outhouse. Throwaway, says he. Takes the biscuit and talking about bunions.
1942		W. Winchell On Broadway 5 July [synd. col.] Look takes the cookie for obvious caption-writing.
1959		A. Sinclair My Friend Judas (1963) 39: Beelzebub, you take the biscuit.
1971		Wodehouse Much Obliged, Jeeves 42: Of all the soppy families introduced to his notice the Bassetts took the biscuit.
1987		T. Paulin ‘The Bungalow on the Unapproved Road’ in Fivemiletown 1: The headboard was padded / with black vinyl – / just the ugliest thing / I’d seen in a long time, / though the new wallpaper / they’d bought in Wellworths – / tequila sunsets / on the Costa Brava – / might take the biscuit.
1994		C. Dexter Daughters of Cain (1995) 38: She just about takes the biscuit, that woman – give or take one or two congenitally compulsive liars we’ve had in the past.
2000		J. Hawes Dead Long Enough 262: You Brits take the sheer shagging biscuit.
2005		Observer Rev. 21 Aug. 7: I am thoroughly sick of lists, but this one takes the biscuit.
2011		Times 30 Apr. 18/1: For timing, though, Anne and Mark take the biscuit.