Add the softened butter, cream cheese, caster sugar, egg, and vanilla extract to a bowl and beat well, using an electric beater, until light and fluffy.
On a lightly floured surface, roll the dough out to 1/8" thickness. Cut with a 2.5" fluted round cookie cutter. Use a 1/2" cutter to cut out the center of each cookie.
Combine the icing sugar and lemon juice in a small bowl until a thick, smooth glaze is formed. Let the cookies set for 10 minutes before serving. Enjoy!