
The difference has to do with the sugar. Caramel is made using granulated sugar (somtimes it's cooked along with milk and or/cream, butter and sometimes vanilla). Whereas, butterscotch is made with brown sugar and has more butter than caramel.
And for those you may be wondering where toffee fits in. . . here is your answer. Toffee is actually butterscotch but it is cooked to the hard crack stage.
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