Combine sugar and water in heavy bottomed sauce pan and stir to combine before placing on heat.
Place pan over medium-high heat and allow to cook untouched until the sugar fully dissolves and turns amber in color. Not stirring this in anyway is crucial to successful caramel. It goes against every instinct I have not to stir something on the stove but I promise, this really is a required step, don't touch it until you add the heavy cream!
Once the sugar is amber in color add heavy cream and stir carefully. The mixture will bubble and expand but continue stirring until well incorporated. Let this simmer for a few additional minutes to thicken slightly.
Remove from heat and add butter, salt and vanilla extract. Stir to combine.
Transfer to a glass bowl to cool completely before using. Keeps in mind this mixture will thicken significantly once cooled.