Preheat your oven to 160°C (320°F). Line an 8-inch square baking tin with parchment paper, leaving overhang on the sides. Combine flour, icing sugar, and cold, cubed butter in a bowl. Rub the butter into the dry ingredients with your fingertips until it resembles coarse crumbs. Press evenly into the prepared tin and bake for 20–25 minutes until lightly golden. Let it cool slightly.
While the base cools, make the caramel. Melt butter in a saucepan over medium heat. Add golden caster sugar and cook, stirring constantly, until the mixture bubbles and turns golden, about 3–4 minutes. Stir in sweetened condensed milk and vanilla extract, then bring to a gentle boil. Cook for 5–7 minutes, stirring constantly, until thickened and bubbling.
Pour the hot caramel over the cooled shortbread base and spread evenly with a spatula. Bake in the oven for another 10–12 minutes until bubbling at the edges. Remove and allow to cool in the tin for 15 minutes.
Once cooled, sprinkle flaky sea salt over the caramel for a satisfying salty contrast. Chill the entire tray in the fridge for at least 2 hours until the caramel is set and firm.
Use the parchment overhang to lift the set caramel shortbread out of the tin. Slice into small squares with a sharp knife, wiping the blade clean between cuts for neat edges. Serve and enjoy this contrasting-texture treat.
