The France international's existing deal with the Red Devils is due to expire next June, and the club have been in talks with the 28-year-old over an extension for some time.
According to ESPN, the 20-time English champions have now accepted that the World Cup winner will not be signing a new deal.
Man United, in theory, could attempt to sell Pogba in January, but the report claims that Ole Gunnar Solskjaer's side are prepared to lose the midfielder on a free transfer at the end of the season.
The Frenchman will not be available for his side's next three Premier League matches against Tottenham Hotspur, Manchester City and Watford after being sent off in the 5-0 loss to Liverpool last weekend.
Pogba previously left Old Trafford on a free transfer in 2012 to join Juventus, and he spent four successful years with the Italian giants before returning to the Red Devils in a £90m deal.