Children are supposed to finish Grey by Christmas of Y2, but obviously there's a big variation. I work in a Junior school, and we have 20 children (out of 96 in the year group) on Grey in Y3, as well as 11 who are below Grey (mostly new arrivals with no English in the past year).
To get off Grey, children need to be reading 80-90+ words per minute, with "intonation that shows some comprehension", know all the sounds, and be able to read words like comfortable, enormous, invisible.
The children I'm starting to pick up for extra interventions are those who have assessed at Grey again for the fourth time now. A term an a half in one level is about as long as they should be, but obviously it depends on the child (and if they were moved up earlier levels too quickly, we'd expect them to stay on Grey for longer).
After children finish Grey in my school, we move them on to Purple on Oxford. The infant school move them to White, but for some reason we've adopted Gold, White and Lime all into Brown, so we put them on Purple to bridge that gap from RWI Grey to Brown (which is what they should be reading by the end of Y3).