Caramel and toffee are similar in that they are both made by heating sugar, but they are different in terms of their ingredients and the way they are cooked. Caramel is made by heating sugar until it turns into a liquid, which is then mixed with butter and cream to create a smooth, creamy confection. Toffee, on the other hand, is made by heating sugar and butter together until the mixture becomes hard and brittle. The key difference between the two is the texture: caramel is smooth and creamy, while toffee is hard and crunchy.