Preheat oven to 350°F (175°C). Beat butter, cream cheese, and sugar until light and fluffy.

Whisk flour, baking powder, and salt. Beat egg and vanilla into butter mixture, then mix in dry ingredients just until a soft dough forms.

Roll dough to ¼‑inch thickness on a floured surface. Cut shapes, place on parchment‑lined sheets, brush with milk, and decorate with sanding sugar.

Bake 10‑12 minutes until edges are lightly golden. Cool on pan 2 minutes, then transfer to a wire rack.

Cool completely, then pile onto a plate and serve.