There’s an 8’ gap between the house and next door’s garage. I’m eyeing it up as a potential narrow laundry room and shower/loo. It will need to be very modest, unobtrusive, and wood clad. Maybe 2m x 7 or 8m.

 It will need planning permission but would potentially be simple to do as there is a door already. I would also be happy with a glass roof for light. Would I need a 1m gap between the buildings or 2m?

Also, would the foundation requirements be different if it’s not sleeping accommodation? We are on clay but this bits not near trees. 
Anyone got any thoughts please?

You can go as close as legally possible if your wall is 1HRFR. Wood cladding not acceptable unless there’s a solid block wall behind it. Foundations don’t differ between non-sleeping and sleeping accommodation.

1HRFR ( 1 hour fire rated y'all!  ).

Would indeed need to be made up of non-combustibles, but B-Regs will dictate / mandate this when you apply, and at that point you will know your possible choices for materials / finishes etc.

8' sounds a perfect size to shoe-horn this in, crack on! 

If you have awkward neighbours the party wall act might make the costs too high for a small sq ft

By joining to the neighbour's garage, is there any risk that your house might change its "estate-agent" description from "detached" to "linked detached" and thus affect its perceived attractiveness to a future buyer? Such things shouldn't of course make any difference but sometimes do. Or did I get the wrong end of the stick and your house will be unaffected.

Yup, too many downsides to attach it.