Thanks John but that’s not the issue. This was not happening before 5.8. I rolled back to 5.7.13 and it then worked perfectly again. Also the main WP content field works fine as well on 5.8 and doesn’t remove the p tags. So it’s definitely just the ACF WYSIWYG field.
I also already have TinyMCE Advanced installed with the appropriate settings and have the issue. Tried deactivating that too just to see if it was conflicting and still the same issues.