In a heavy 4 quart saucepan melt butter over medium heat; add brown sugar, corn syrup and milk. Stirring constantly, heat to 242 to 248 degrees F (116 to 120 degrees C), or until a small amount of syrup dropped into cold water forms a firm but pliable ball. Remove from heat and stir in vanilla extract. Pour into prepared pan.
When caramel has cooled and set, cut into 1 inch squares. Chill in refrigerator until firm.
Melt chocolate with 1 tablespoon butter in the top of a double boiler or in a bowl in the microwave. Stir until smooth.
Dip caramel squares in chocolate and place on wax paper to cool.
