If I keep my son home from school to homeschool him for the rest of the school year. When it comes to September and we apply for schools (in transfer for Year 4). Would he be eligible for free transport even through we would have turned down a YR 3 in transfer place at a school that the LA assigned (and thus declined the free transport to that school).
If the nearest school with places is more than 3 miles away by the shortest walking route your son would be entitled to free transport to and from that school. Having said that, if the school is further from home than the one you rejected the LA may try to argue that you are manipulating the system so you may need to fight for your entitlement, but I can't see any grounds on which the LA could legally refuse.