Looking at the Apple UK site I can see an offer to upgrade your iPhone by trading it in and receiving a gift card. The offer says:-
"Trade in your eligible device for an Apple Store Gift Card. If it’s not eligible for credit, we’ll recycle it for free. No matter the model or condition, we can turn it into something good for you and good for the planet."
I read that as meaning that no matter what condition the phone is in, Apple can do something with it, even if it's only recycling it for you. the caveat is in those words "...If it's not eligible for credit". I would imagine that to be eligible the phone must at least be working.
Alternatively, there's an upgrade programme which basically involves taking out a loan for the new iPhone, and becoming eligible for a new phone after 11 months and every 11 months are that as long as you keep on taking out new loans.