Line a 9×9 baking pan with foil and set aside.

In a heavy-bottomed saucepan fitted with a candy thermometer, boil butter, sugar and water, whisking occasionally. Continue to cook until temperature reaches 305°F, watching carefully. The toffee will go from pale yellow to dark golden about this time. Remove from heat, stir in vanilla and pour into the lined pan. The toffee will not cover the entire pan. Quickly top with pretzels and let cool until set and hard.

Melt chocolate and drizzle over toffee. Break into chunks before serving. Store in an airtight container.