Busking is performing in public with the intention of soliciting money for the performance.
Shaking a tin, or collecting for a charity is not busking. This activity probably needs a permit from the local council under the Street Collections regulations.
Busking on public, as opposed to private premises, is not generally illegal (except in the City of London) unless you cause an obstruction or a nuisance. (There has never been a successful prosecution of a busker to my knowledge!)
You do not need a permit under the Licensing Act as you are not a 'premises'. You do not need a PRS/MCPS licence - only premises need these.
You must be prepared to move on if asked
Children under 14 years may not busk
Begging, and donating to beggars is illegal wherever it happens
Busking on private property needs the permission of the owner
Some (very few) local authorities in the UK have passed by-laws prohibiting busking. (None in Gloucestershire)
If you want to busk it is worth contacting the local authority to see if any by-laws have been passed with regards to busking. (look on their web site, and use the search facility for 'busking')
Some Gloucestershire District Councils (including Gloucester, Cheltenham) have a ‘code of practice’ for buskers which is mainly commonsense (Cheltenham code is HERE )
Gloucester City did introduce a permit system (with auditions) a few years ago to prevent one particular person 'performing' but this was discontinued on legal advice
The selling of merchandise (ie CD’s) is classed as street trading, and may need a permit from the Local Authority. However, the Gloucester, and Cheltenham codes of practice do permit this provided it is small scale.
'Salting' your guitar case, or other collecting receptacle before you start with some coins is a good idea (works for me!) but make sure it is £1 and £2 coins, not coppers!
There is a Wikipedia article on busking at: http://en.wikipedia.org/wiki/Street_performance
The BBC has a guide at: http://www.bbc.co.uk/dna/h2g2/A8239999
There is a pretty well researched guide to UK law at: http://www.squidoo.com/how-to-make-money-busking-in-the-uk
There is even a Facebook page: http://www.facebook.com/pages/Musical-Busker/8317521052?ref=ts
Be Careful Out There
Personal safety is paramount. Don't expose yourself to unnecessary risks and do plan an escape route in advance should danger threaten. You may be in possession of musical instruments worth hundreds or even thousands of pounds. Some low-life may feel you are worth robbing if you have your takings on display.
Don't busk at night. Passers-by won't get their purses or wallets out at night for strangers, and may regard you as a potential mugger.
I do have a formal risk assessment form available RISK ASSESSMENT FORM.doc for busking, which you might get asked for if you perform on private premises.
©Peter Cripps 2011