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You can create the files for an e-book yourself. Amazon provides free software to help you do this. Kindle books are in HTML, the language of web pages, with some variations. So if you're familiar with HTML, you can do it yourself. If you're not familiar with HTML, and aren't prepared to learn, there are automated tools to create a Kindle file from an MS-Word document, but the results often have problems. There are companies out there that will convert MS-Word or other documents to Kindle format for a fee. I've never used one of these so I can't make any recommendations or say how good a job they do.
The way my Kindle account is set up, Amazon deposits my share of any sales to my bank account. Maybe there's a way to make it an Amazon credit, if so I don't know anything about that, but I wouldn't see the advantage. I'd rather just get the cash, and if I want to turn around and spend it at Amazon, fine. So it's just a direct deposit to your bank account, much like many jobs now direct deposit your paycheck to your bank account.
I'm an American so I don't know about UK tax law, but I'm sure any profits you make selling books are taxable. Here in the US, it's considered a business and taxed like any other business. You have your sales as income, and then from this you can subtract expenses, like I deduct the cost of advertising and some minor other expenses.
Whether you can make a living selling ebooks is a completely different question from these mechanics. That comes down to: How many books can you write and how many copies can you sell? Some people have become millionaires writing. I think most writers mostly do it for the fun and satisfaction. I typically make several hundred dollars a year from my books. No way am I frugal enough to live on that.
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