My DS is at a VC CofE primary; we're not Christian (I'm atheist, DH has a different religion, DS can choose his own path - including Christianity if he wants - but currently is very sure he does not believe in any god). Before anyone shouts at me "about choosing a faith school", it's a rural area, it's the village school, the CofE has a bit of a monopoly locally. Plus the CofE tells parents its schools are church schools not faith schools and are for all faiths and none.
OP, even in a community school or academy a daily act of worship of a Christian character is mandated by law (unless the school has obtained special permission to substitute a different religion if say the largest group of pupils are Muslim or Jewish). Your child's school likely has a relationship with the local parish church and the vicar will be visiting the school and leading worship there occasionally, you just haven't been aware as it's part of the school day. The reason you know about this service is that it's off site.
You are allowed to opt your children out of worship but be aware it's isolating within the peer group and school community, which is why most of us grit our teeth and don't do it.
If you have any concerns about your child being asked to participate in Christian worship in a way that compromises their integrity at this service, personally I would go visit the church/reach out to the vicar and have a chat. They are generally very good about accommodating children of other faiths and being respectful of that, but sometimes need reminding, especially about making it clear to the child where they don't have to participate (little children might otherwise feel conflicted as teqchers/vicars are authority figures). Collective worship is officially supposed to tread the fine line between being Christian worship but allowing non-Christians to participate or observe without compromising their own beliefs, though as I said, they sometimes need reminding.
I'd rather our children didn't have to participate in daily worship in someone else's faith but we suck it up so he's not ostracized. DS says he treats it as a group sing song, he likes the storytelling, and he just sits quietly during the prayers and doesn't say them.
I would watch out for Easter rather than Christmas tbh. If the Easter story is not part of your child's landscape it can be pretty traumatic in the second term of Reception, age 4. DS had a very wobbly couple of months over it.