Anything that has been next to your skin goes in the bin.
Anything else that isn't in too bad a condition is recycled (remember that we are not talking exclusively clothes here...).
We know roughly how many people will join per annum (plus and minus) and we know roughly how many combat trousers (for example) will be required to replace those damaged by wear and tear. Add on 10-20% because this is an inexact science and you have your target demand.
Factor in the reduction in the clothing budget caused by, firstly, the Treasury and, secondly, Air Marshal Miggin's desire for the latest whizz bang rocket and each Battalion QM will have exactly 4.73% fewer combat trousers than he actually needs.
This is the point at which the CO desperately needs a crusty old LE QM to track down the missing combat trousers. The QM must then steal/beg/borrow the trousers (one of AM Miggin's rockets may well go AWOL in the process..) and all is well in unit lines.
Flashy's comment about the short Jewish tailor is completely true; in Week 1 he cuts off the bottoms of long combat trousers in order to shorten those trousers for short soldiers (usually Gunners and Tankies). In Week 2, he sews on the off-cuts to make trousers for tall soldiers (usually the Guards and REME).
It is a good idea to remember that and ensure that your Platoon Corporal knows in which week you will need to be tailored.
When i handed back my kit they took my boots back as they were in good condition and the shit trainers which fucked my legs up aswell. I had a shirt which had be used before and my helmet etc.. But most of the kit was probably second hand haha.