Having been made to sleep in the car by Mrs Khan after forgetting their wedding anniversary, Mr Khan is on a mission to make amends. But his boast to Dave that he knows local boy Moeen Ali backfires when Amjad suggests he could get the famous England all-rounder to make a celebrity appearance at the fundraiser that Mrs Khan and Shazia are helping organise. Mr Khan has no option but to get to the cricket match to find Moeen and do whatever it takes.

Mr Khan buys a drone camera to keep an eye on the local neighbourhood and finds out that his grandson Mo is being bullied at nursery. However, when he decides to take Amjad in hand and teach him how to be a better dad, he gets a lot more than he bargained for during a trip to the local pool and later when re-enacting a scene from gangster drama Peaky Blinders. Meanwhile, Shazia and Amjad are getting ready to go on their first family holiday together, except Mrs Khan thinks she's going along too.

Tragedy strikes the Khan household, as Amjad's bewigged father, Mr Malik, is knocked down andhuged by the number 37 bus. The real tragedy for Mr Khan is that the grief-stricken Mrs Malik is staying with them and comfort eating him out of house and home. But when Mr Khan discovers he might be able to find an investor for his new invention amongst the funeral mourners, he throws himself into the burial arrangements.

Alia's 'friend who is a boy' Scab fears the prospect of the Khans meeting his parents.

Mr Khan has to drop his daughter Alia off for her first day at university - in Scotland. Mrs Khan wants the whole family to come, so Mr Khan has to find a way to get the whole lot of them from Sparkhill to Glasgow. When the car breaks down, he is forced to improvise alternative travel arrangements, which gives them all plenty of time to reminisce about Alia's early years.

Mr Khan and Mosque manager Dave organise rival Muslim Days at the community centre. Mr Khan is convinced his fun day with a bouncy Mosque and 'pin the beard on the Imam' stall will be far more popular than Dave's Women in Islam event. But he forgets that he'd agreed to look after his wayward niece Shabana. Mr Khan is forced to take the stroppy teenager to Muslim Day with him and, to top it all off, Dave has managed to invite Baroness Sayeeda Warsi, whom Khan is desperate to impress.

Mr. Khan tips his hat to Frank Capra's Christmas classic It's A Wonderful Life, with Sparkhill taking the place of Bedford Falls and Mr. Khan, like George Bailey, facing up to the fact that his life hasn't turned out the way he planned it. But an encounter with a mysterious heavenly passer-by shows him how things might have been different and convinces him that, despite all its frustrations, his is a "Khanderful Life" after all. Mr Khan narrates as we go back in time to the The Khan's early years.