Year 2 and Year 1 Mum here of two able readers. Helped a lot due to lockdown.
My advise - ask directly what they need to do to be moved up. Don't ask them to be moved up, ask for clear things they need to work on.
Things I have been told over the past 3 years
Non fiction reading - much harder than fiction, not as repetitive so words can't be remembered, understanding the concept of contents pages etc.
Fluency, being able to pick up and just read - no sounding out of the words even on the first read.
Expression - lots of students really struggle to do this in front of other students, teachers etc - we have counteracted this, as my eldest ends up very shy when reading in a group, we post videos of them reading on learning journal.
My top tips find a library with plenty of choice, buy reading scheme books and get them to read the next level up at home, buy non fiction books on topics that interest them - or get them from the library.
We ask lots of comprehension questions, retell with the story map at the end of the books, ask why they think things happened, what might happen next, which character they would like to be etc.
Read Chapter books to them - I have done this since nursery - read something on reading the next level of reading ability up to them - sometimes we share a bit of the reading but it inspires them to want to improve.
School should be supporting but as others have said Ofsted are really focussing on reading linked to phonics taught and not accelerating the phonics above the level for that year group. It's similar to Maths - breadth, applying, understanding, investigating, delving deeper, is just as important than flying up though the levels.
Yellow at this stage sounds about right - eldest is a September born and very able reader - she left reception (although effectively the start of year 1 due to lock down) on nearly finishing blue - was Yellow in March as I had discussed level just before the world went pants.