OP,
I live the in the UK and have done so since primary school age. I also have a foreign last name because I am foreign, to state the obvious I guess!
I remember really vividly kids making fun of my last name. It started in primary school too, albeit not as young as Y2 and I would not describe it as full on bulling. It carried on until sixth form (though grown adults still sometimes try to make fun of it or mispronounce it on purpose). I remember it to this day so it clearly did impact me. I also remember for a really long time wishing I had a different anglicised name and DREADING any time my last name was mentioned in school.
How anxious it made me makes me so sad. Because I adore my last name now and wouldn’t give it up for the world. I think it’s a really important part of who I am and is a name I have now also passed to my child, as I think it’s an important link to their heritage given they will grow up entirely in the UK.
Your post has made me quite sad, I really thought times had moved on. It didn’t cross my mind that one day my own child may be made fun of because of the last name I now love so much. I’m so sorry your daughter is dealing with this.
I would say something, either to the teacher or to the parents of the children. I’d be pretty bloody mortified to find my child doing this. I know it’s not what your daughter wants, but as others have said, she’s so young and needs you to advocate for her.
Do you know the parents of said children, if so, do they seem like reasonable people? I’d maybe explain to them what’s going on and that for the time being you don’t want to involve the teacher but could they speak to their children, perhaps saying “I overheard you making fun of xyzs last name… why did you do that”, so perhaps it isn’t as obvious it’s come from you / your daughter.
Also, knowing how it made me feel, I would sit down with your daughter and explain to her where her last name comes from, why it’s “different”, but how special it is. And that when she’s older people will love her last name and hearing about her heritage and history. I guess try and give her the confidence or understanding to be proud of her wonderful, different name!