Preheat oven to 350°F. Grease cake pans thoroughly.
Mix flour, baking powder, and salt together.
Cream butter and sugar until light and fluffy.
Add eggs one at a time. Beat well.
Alternate adding flour mixture and milk. Mix gently.
Stir in vanilla extract until just combined.
Divide batter evenly between prepared pans.
Bake for 25-30 minutes until golden brown.
Cool in pans for 10 minutes completely.
Make caramel by melting sugar until amber colored.
Add butter carefully, then cream and vanilla.
Cool caramel sauce until thick but spreadable.
Layer cake with caramel between each layer.
Sprinkle toffee bits generously over frosting.