Preheat oven to 375 degrees and line 24 muffin cups with paper liners.
Beat butter and sugar with an electric mixer until light and fluffy.
Beat in eggs one at a time. Beat in vanilla. Scrape down the sides of the bowl.
In a medium bowl, whisk together flour, cocoa powder, baking soda, and salt.
Combine buttermilk and water.
Add flour mixture to butter mixture, alternating with buttermilk mixture, and beginning and ending with flour mixture.
Fill muffin tins halfway with batter. Bake for 15 to 18 minutes. Let cool before frosting.
To make frosting, whisk together powdered sugar and cocoa powder.
Using an electric mixer, beat butter with 1/2 cup of powdered sugar mixture until smooth. Beat in milk and vanilla and then the remaining powdered sugar mixture until smooth.
Stir in 3/4 cup toffee bits. Spread frosting on cupcakes. Sprinkle with remining toffee bits.