Butterscotch is a flavour similar to caramel.
The flavour of Butterscotch used to be everywhere. It was in sauces and syrups, in butterscotch cream pie, butterscotch frosting, and butterscotch ice cream. It remains a popular pudding flavour in America.
It is based on butter (as the name would indicate) and brown sugar. The butter and sugar are cooked together until a Maillard browning reaction occurs that changes the combined flavour of them. Some American recipes will use butter, sugar and corn syrup.
The fat helps stop the mixture from getting rock-hard when it cools. The addition of an acid such as cream of tartar, or lemon juice, or vinegar, or lemon peel, also helps. Additional fat in the form of milk or cream is usually only added when you are going on to make a pudding or sauce.
The proportion of butter will vary by recipe.
Butterscotch can be sold as sauces, pudding mixes, hard candies, etc. It can also be sold as flavoured chips, which are meant to be used as you would chocolate chips.
The term Butterscotch is also used to describe the golden colour of it — “the color of sunshine mixed with honey” 
Caramels, Butterscotch, Taffy, Toffee
- Caramel and Taffy are soft; they are cooked to a firm-ball stage of 245 – 250 F (123 – 125 C);
- Butterscotch is harder; it is cooked to a soft-crack stage of 270 – 290 F (132 – 143 C);
- Toffee is hardest of the four candies; it is cooked to a hard crack stage of 300 to 310 F (150 to 160 C.)
A further difference between Taffy and Toffee is that Taffy is pulled; Toffee is poured into a mould.
No one is sure where the ‘scotch’ part of Butterscotch comes from. Some speculate it was actually ‘scorch’, from the production method. Some say it indicates a Scottish origin, which is however unlikely. A now rare meaning of the word Scotch is as a verb meaning to cut or score something. It could be used here to indicate the sheets of candy being scored and cut up into pieces of candy.
Butterscotch was mentioned in The Boy’s Autumn Book, 1847: “Well, you know, next morning I put my things in my cart, ready for Nottingham goose-fair: the brandy-balls here, by themselves—the butter-scotch there.”
It seems to have been made even before it was called “butterscotch.” Everton toffee appears to have been white sugar, and butter. Molly Bushell (1736 – 1818) opened a candy store in 1753 in Everton, near Liverpool, and used a recipe a local doctor named Dr Gerrard  was using to give people for cough candies.
Later, it was made under the name of Butterscotch by a Samuel Parkinson in Doncaster, South Yorkshire, England. His company Parkinson’s would make Doncaster famous in England for its Butterscotch. The date of first production is thought by some to be 1817, though this is disputed. “It was on the 11th of May 1817, that the late Mr. Samuel Parkinson commenced the manufacture of butter-scotch.” — Doncaster Review, September 1896.
The Parkinson company operated until 1977, then closed. The original recipe was found and production began again in 2003.
Literature & Lore
Everton toffee: Mrs Beeton’s Recipe Number 1597
1 lb of powdered loaf sugar
1 teacupful of water
¼ lb of butter
6 drops of essence of lemon
Put the water and sugar into a brass pan, and beat the butter to a cream. When the sugar is dissolved, add the butter and keep stirring the mixture over the fire until it sets, when a little is poured on to a buttered dish; and just before the toffee is done, add the essence of lemon.
Butter a dish or tin, pour on it the mixture, and when cool, it will easily separate from the dish.
Butter-Scotch, an excellent thing for coughs, is made with brown, instead of white sugar, omitting the water, and flavoured with ½oz. of powdered ginger. It is made in the same manner as toffee.
Time: 18 to 35 minutes.
Sufficient to make 1lb of toffee.
 Sagon, Candy. Sticking With Butterscotch. Washington Post. 7 March 2007.
 Bibliographical Society of America, & The Historic Society of Lancashire and Cheshire. Proceedings and papers. 1852. Page 71
Perry, Charles. Butterscotch: Our old friend is still here, as rich, mellow and seductive as ever. Los Angeles Times. 28 November 2001.