It's another grey area!
The two issues involved are:
- Will you need planning permission?
- Will you have to pay business rates instead of, or as well as, council tax?
So for example, if you're sitting in your lounge hand-sewing patchwork cushions for sale by mail order, or sitting at your computer writing articles, you won't be disturbing anybody, so you don't need planning permission.
But if there's going to be more traffic, more noise, more visitors (customers and/or suppliers), more large vehicles delivering stock, then you should speak to your local authority. So if you want to turn your garden shed into a blacksmith's forge, then you'll definitely need planning permission.
Business rates are an even greyer area. The difference between these and council tax is that business premises pay business rates, domestic occupiers pay council tax. So if you work from home - which category is that?!
If you use a large part of your home just for your business, then you could be liable for business rates. But if you only work in one room, and that room's also used for non-business activity, you're unlikely to be liable.
As an example - my office doubles as a music-room, and a quiet room to escape to when Matt's watching the football. So it's not just used for business, and I pay council tax, not business rates.
The Valuation Office Agency (VOA) which is now part of HM Revenue & Customs gives some examples of how they would judge whether you need to pay business rates or not. They look at each case on its own merits - so if in doubt, contact the Valuation Officer for your area. You can find contact information here.
As always - if in doubt, check it out!