At the time of the formation of the Isle of Wight Council in 1995, the assets of the former South Wight Council passed to the new Unitary Authority. The Council continued to run the Theatre but with subsidies of up to £250,000 per year, and in 2008 the Isle of Wight Council decided that the Theatre was no longer a financially viable proposition and gave notice it would close. At the time Council Officers were looking to sell the site with a proposal that the Theatre be demolished and an apartment block built on the site.

Local residents with links to the Theatre formed “The Friends of Shanklin Theatre” (FOST) and a campaign group “Shanklin Theatre Action Group” (STAGE) to fight the closure. Working with Shanklin Town Council and local members of the Isle of Wight Council, and fully supported by the Theatres Trust, application was made to English Heritage to grant Listed Building Status to the Theatre; and Grade ll Status was awarded on 3rd February 2010. The listed building status stopped the option for demolition.

The Isle of Wight Council Cabinet meeting on the 19th January 2010 saw the Council voting to close the Theatre at the end of March 2010, but giving general support to the concept of the Theatre being operated by a community group.

In April 2010 the Town Council, working with The Friends of Shanklin Theatre, formed an operating company “Shanklin Theatre Limited”, to take over day to day running of the Theatre under a “Licence to Occupy” signed by the Mayor of Shanklin on behalf of the Town Council. Shanklin Theatre and Community Trust, was set up as a registered charity to hold the building, and to own the assets of the Theatre upon the subsequent purchase of the building from the Isle of Wight Council.

Negotiations for the transfer of the freehold of Shanklin Theatre to Shanklin Theatre and Community Trust were protracted, but early in March 2013 the agreements were finally signed off and the ownership of Shanklin Theatre transferred to the Trust.

When setting up the Trust the members of Shanklin Town Council recognised that other important amenities and buildings were under threat from budget cut programmes of the Isle of Wight Council, so the remit of the Trust when it was set up was much broader than just holding the Theatre building, hence the name “Shanklin Theatre and Community Trust”. The Trust also holds the Town’s interests in Shanklin Library, and the public toilets on the site of the former “Spa Hotel”.