As far as i'm aware, yes you do need planning permission, i think the rule is, if the room is still going to be dual use, then no you dont need permission, i.e. if you were going to set up in the corner of your kitchen or conservatory etc, but if the room is a new one or an exisiting one, made soley for the use of your business then yes you do need permission and i think it means you have to pay business rates on it too (might depend on the individual council)
I'd ring you local panning office, tomororow see whats involved and what they can tell you hun, then whatever they say, ask them to send you it in black and white, only because our local office agreed to a 2 storey extension over the phone for us, then denied our application , until we produced the letter where theyd originally agreed to it, then they had to let us continue, but if we hadnt asked for it in writing, we wouldnt have had a leg to stand on
as for cost, again that depends on where you live, and who you gte to do it, why not ring a couple of local contractors and get them to give you a free quote, you will need water, elecy/gas etc insulation, and maybe a new floor (depending on exisiting one) are you having the garage door removed and a wall built with a door in its place? if so then windows, doors etc, and then theres fittings inside, make sure you draw out a plan of what your going to want inside and where, then they will have an idea of what to quote you for
hths hun xx