Preheat oven to 180 degrees C. Grease two biscuit trays.
Place butter, sugar, vanilla, lemon essence, lemon rind and egg into food processor and blend until creamy. Add sifted flour and baking powder until soft dough forms. Wrap in plastic wrap and put in the fridge for an hour. chill for about an hour-but no longer.
Roll the dough out to about 1/2 cm thick and cut out with biscuit cutters then sprinkle with sugar. Bake for 10-15 minutes or until golden brown. Can be iced with Royal Icing when cool, if desired.