Do you require planning permission? This question can be answered through an informal approach to your Local Authority with the outcome dependent on whether the planners feel that your home will no longer be used mainly as a private residence. This is determined by factors such as an increase in traffic to your home and whether you will be disturbing neighbours by intrusive levels of commercial activity. For most internet based businesses this should not be an issue as customers are not coming direct to your door and you are not manufacturing on your own premises. But you would be well advised to contact your Authority and seek assurances that you have the required planning permission to start building.
Your tax position will also be affected. The rooms or part of your house that you use for work may be charged business rates rather than council tax. Again, you should contact the Local Authority to agree their position on this. If you have dedicated working space, this part of the house will also be liable for capital gains tax when the property is sold. On the upside, you are saving costs by operating from home rather than taking on the overheads of a second property and if you are VAT registered you can claim back VAT on items that you buy for business use. You can also claim tax relief on domestic bills that relate to the parts of the house in which you work.
If you are thinking of employing people in your newly expanded home, be aware of the relevant health & safety regulations. In a useful online guide* the Health & Safety Executive recommends home business owners carry out a five step assessment to identify and guard against risks in the workplace. And finally, be sure to let your insurance provider know that you are expanding into a new area of the house as this may have an impact on your home insurance policy.
*guide available at http://www.hse.gov.uk/pubns/indg226.pdf