A lot of the answers to the questions will depend on what you plan to do with the service.
If your donations are simply voluntary contributions paid by people because they want to support what you are doing and assist with the running costs and you don't make any profit (ie you are having to cover some of the costs yourself) then this probably isn't taxable income at all. This is more likely to apply where you are simply hosting a site/service, it sounds like you do more than this.
If there is a fixed fee or a requirement to pay something to use the service or get the item/ranking/etc and you are making a profit already (or you intend to scale things up (advertising etc) to make a profit in future) then it's likely to be a business. In any case it sounds like you are making a profit from this already.
As an individual you have a tax free allowance of £12,500, which means that if you have no other income unless you are making £12,500 of profits you won't have any tax to pay. The £8,500 is taxable income, but the first £12,500 is tax free. Also, bear in mind you can deduct all running cost of the business and it's only the profit that's taxable (not sure if the £8,500 is before or after expenses). There is the trading allowance of £1,000, but this doesn't allow you to deduct any costs, so I'd suggest that this would not be attractive to claim if you are spending £130 a month currently.
At this stage it would be important to find yourself an accountant (ideally one who understands what you are doing) who can advise you on what you need to do to be compliant, particularly if you will grow the business over time. It's then a question of whether you should continue as a sole trader in your personal name or set up a company going forward.
Thank you so much for replying, everything you've stated is very valuable to me, you have done more than enough, thank you for taking the time out of your day to give me advice, valuable advice at that, I will take your advice when it comes to expanding and now can keep my mind at rest as long as Im under the 12.5k limit, Thank you once again for the support, very much appreciated, couldn't have asked for much more.