Legal Costs, Expenses Are Taxable Earnings, UK Court Rules

“No win, no fee” legal costs and insurance premiums incurred in winning a settlement from an employer are taxable earnings, a UK court said Thursday, adopting an expansive definition of what constitutes profit subject to income tax.

The dispute centered around whether a London Metropolitan Police officer could deduct from taxable earnings an insurance premium and a separate “success fee” charged by lawyers out of a settlement paid to him. Keith Murphy, was one of a group of police officers who won a group litigation against the police force, in which they were awarded overtime and other ...