Prepare the pan: Line an 8×8-inch square baking dish with parchment paper or lightly grease it with butter. Set aside.

Cook the caramel: In a large saucepan over medium heat, combine the butter, heavy cream, brown sugar, corn syrup, and water. Stir constantly to melt the butter and dissolve the sugar.

Boil: Once the mixture begins to boil, reduce the heat to medium-low. Continue to cook, stirring occasionally, for about 20-25 minutes, or until the mixture reaches 245°F (118°C) on a candy thermometer. This is the firm-ball stage, where the caramel will be chewy but not too hard.

Add vanilla and salt: Once the caramel has reached the correct temperature, remove the pan from heat. Stir in the vanilla extract and salt. If you’re adding nuts, stir them in now.

Pour into the pan: Carefully pour the hot caramel into the prepared baking dish. Let it cool at room temperature for about 1-2 hours or until it is firm enough to cut.

Cut and wrap: Once the caramels have cooled and set, use a sharp knife to cut them into small squares (about 1-inch). For an extra festive touch, sprinkle with coarse sea salt on top of each caramel.

Wrap and store: Wrap each caramel in wax paper or cellophane to prevent them from sticking together. Store them in an airtight container at room temperature for up to 2 weeks.