Once you've set up an employee loan, you can write it off, if required. 

You need to deduct class 1 National Insurance on the value of the benefit when you write off an employee loan. Report this to HMRC on form P11D, outside of your payroll software. To find out more, visit Gov.uk.

Follow the steps below to stop Sage 50 Payroll from calculating deductions for a loan.

Write off a loan

1. Double-click the required employee, then click the Employment tab.
2. Click Pay Elements, then click Loans.
3. For the relevant loan, click the Status box, then click the Status finder button.
4. Choose Written Off, then click Save.