Preheat the oven to 350°F (175°C) and line a baking sheet with parchment paper.

In a saucepan, combine sugar, butter, and water over medium heat, stirring until the mixture boils.

Once boiling, let it cook for about 5 minutes without stirring until it turns a golden color.

Remove from heat and stir in vanilla extract.

Add walnuts to the toffee mixture and stir to coat evenly.

Spread the coated walnuts onto the prepared baking sheet.

Bake in the preheated oven for 10 minutes, stirring halfway through.

Remove from the oven and let cool before serving.