Hi Charlene!
Well, this is one we've faced!
Our "annexe" which was previously a games come junk room with a loo, hand basin and shower was tidied up and we decided to airbnb it.
Tentatively we listed it and thought it ideal as on ground floor and looked a handy base for walkers etc.
A few months in and we've been slapped with a revaluation of the annexe which now has it's own council tax band - A.
We're also having to pay right back from September last year ontop of the rate for this year, resulting in an extra £1400 and some pounds plus the £768 the council says is owed from last September despite in September we had our 1st guest on the 29th - no clemency has been shown!
Our payments each month just on the annexe are £245. The house is £1650 for the year, so with £1400 for the annexe, our annual bill is in excess of £3k.... for a two bed end of terrace!!!
Anyway, where we are is very beautiful and we've decided to make lemonade with the lemons we've been thrown BECAUSE the annexe council tax will come off our costings and should we sell in the future, as it is recognised by the council it has actually increased the market price of the property by around 25% !
We're not going to apply for business rates because we don't want to get clobbered when we sell.
Our vindictive neighbour unintentionally did us a good turn by "anonymously" reporting our airbnb'd room. Thanks much!
We were absolutely unaware that we needed to pay extra council tax, so am glad it happened when it did as we could have faced owing alot more in time to come.
As it I'd, the room is paying for itself at the moment and we're getting a little bit of extra income as was the idea when we started due to work drying up in the area for my husband in the construction industry - he drives machines and periodic work is available, but nothing much long term.
Oh, I forgot to add...
We have a microwave, kettle and a water dispenser, mini fridge and a posh bin in the room along with 2 single beds.
Hope this helps to allay any concerns for you, as it's ok for us at the moment .
If it didn't work out, we'd investigate removing the "independent " status and keep our kitchen door open so it returned to being just part of the downstairs area or even a dining room.
Take care and enjoy your venture if you do go ahead.