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Grease a 9×9 baking pan and spread half of the finely chopped nuts evenly across the bottom.
In a heavy saucepan, combine butter, sugar, and water over medium-high heat. Stir constantly to prevent burning. Keep stirring until it reaches a golden brown color and starts to smoke slightly.
Once the toffee reaches the desired color, remove it from heat and quickly stir in the vanilla extract. Pour the hot toffee over the prepared nuts in the pan, spreading it evenly.
Immediately sprinkle the chocolate morsels over the hot toffee. Let them sit for a minute to melt, then use a spatula to spread the chocolate into a smooth layer.
Sprinkle the remaining nuts on top of the chocolate while it’s still warm. Gently press them into the surface to ensure they stick.
Allow the toffee to cool completely at room temperature. Once hardened, break it into bite-sized pieces using your hands or a knife.