Your mates are right, you need to declare it to the tax man. Though you will not need to pay any tax on it (if this is your only income) I think you are allowed about £4,000 tax free or something like that.
If you have income from a full time job in addition to your income from blogging, then you will definitely have to pay quite a bit of tax, but you should keep your hosting receipt, links you buy etc etc as those will be deducted from your earnings from your blogging, you will then be tax on the difference between what you earn and what you pay out to keep your blogs online.
Its always better to speak to a professional though, I have not accountancy qualifications whatsoever but I am fairly sure that is how things work.
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