Is it better to say in our prayer Sayyiduna Muhammad (our master Muhammad)?

Firstly: 

Undoubtedly referring to the Prophet (peace and blessings of Allah be upon him) as “sayyid (master)” is quite valid, for he (peace and blessings of Allah be upon him) is our master, and indeed the master of all of mankind. Muslim (2278) narrated that Abu Hurayrah (may Allah be pleased with him) said: The Messenger of Allah (peace and blessings of Allah be upon him) said: “I will be the master (or leader) of he sons of Adam on the Day of Resurrection.” And al-Tirmidhi (3615) narrated that Abu Sa’eed (may Allah be pleased with him) said: The Messenger of Allah (peace and blessings of Allah be upon him) said: “I will be the master (or leader) of the sons of Adam on the Day of Resurrection and I am not boasting. In my hand will be a banner of praise and I am not boasting. There will be no Prophet that day, Adam or anyone else, but he will be beneath my banner. I am the first one for whom the earth will be split open and I am not boasting.” Classed as saheeh by al-Albaani in Saheeh al-Tirmidhi. 

Secondly: 

It must be noted that acts of worship are based on following, and nothing can be added to any act of worship as it was prescribed by the Messenger of Allah (peace and blessings of Allah be upon him). This is one of the signs of a person’s love for Allah, may He be glorified and exalted. Allah, may He be exalted, says (interpretation of the meaning): 

“Say (O Muhammad صلى الله عليه وسلم to mankind): ‘If you (really) love Allah, then follow me (i.e. accept Islamic Monotheism, follow the Qur’aan and the Sunnah), Allah will love you and forgive you your sins. And Allah is Oft-Forgiving, Most Merciful’”

[Aal ‘Imraan 3:31]

Following means doing it as he did it, and saying it as he said it, refraining from that which he refrained from, and not adding anything to it or subtracting anything from what he did. 

The Prophet (peace and blessings of Allah be upon him) said: “Whoever does an action that is not part of this matter of ours (Islam) will have it rejected.” Narrated by al-Bukhaari (2697) and Muslim (1718). 

What is narrated from the Prophet (peace and blessings of Allah be upon him) in the tashahhud in prayer is: “Wa ashhadu anna Muhammadan ‘abduhu wa rasooluhu (and I bear witness that Muhammad is His slave and Messenger)”. And what is narrated with regard to sending blessings on him is: “Allahumma salli ‘ala Muhammadin … Allahumma baarik ‘ala Muhammadin (O Allah, send blessings upon Muhammad … O Allah, bless Muhammad).” It is not narrated at all that he taught us to say “Sayyidana”, so we should not add to what the Prophet (peace and blessings of Allah be upon him) enjoined us to say and taught us. This is undoubtedly better. How can it be better to go against the teaching of the Prophet (peace and blessings of Allah be upon him), when he (peace and blessings of Allah be upon him) used to say every Friday in his khutbah, and announce it from the minbar: “The best of speech is the Book of Allah and the best of guidance is the guidance of Muhammad (peace and blessings of Allah be upon him).” Narrated by Muslim (867). 

Al-Haafiz Ibn Hajar (may Allah have mercy on him) was asked: Is it better to say, when sending blessings upon the Prophet (peace and blessings of Allah be upon him), “sayyidana” because it is an apt description of him, or not to say that because it is not narrated in the reports? 

He replied: 

Following the phrases that have been narrated is better, and it should not  be said that he (peace and blessings of Allah be upon him) refrained from saying that out of humility but his ummah is recommended to say that every time he is mentioned, because we say: If that was correct, it would have been narrated from the Sahaabah then from the Taabi’een, and we have not found anything in the reports from any of the Sahaabah or Taabi’een to suggest that he said that, even though there are so many reports on this topic.  

Then he quoted some reports from some of the Sahaabah and Taabi’een, and from Imam al-Shaafa’i, in which the word “Sayyidana” is not mentioned … Then he said:  

This issue is well known in the books of fiqh. The point is that none of the fuqaha’ who discussed this issue used the word “sayyidana”. If this addition had been recommended, it would not have been unknown to them and they would not have ignored it. All goodness is in following and Allah knows best. End quote. 

Quoted from him by al-Albaani in his book Sifat al-Salaah (The Prophet’s Prayer Described), p. 153-155. 

The scholars of the Standing Committee were asked: Is it permissible for us to say when speaking of the Messenger of Allah (peace and blessings of Allah be upon him): “Sayyiduna Muhammad (our master Muhammad)” in contexts other than those which are narrated in texts such as al-salaah al-Ibraheemiyyah (sending blessings upon the Prophet (peace and blessings of Allah be upon him) in the prayer) etc? 

They replied: 

With regard to sending blessings on the Messenger of Allah (peace and blessings of Allah be upon him) in the tashahhud, there is no report – as far as we know – in which the word “sayyiduna” is mentioned, i.e., “Allahumma salli ‘ala sayyidina Muhammad (O Allah, send blessing upon our master Muhammad)” etc. The same applies to the adhaan and iqaamah, in which the word “sayyiduna” is not used because it is not mentioned in the saheeh ahaadeeth in which the Prophet (peace and blessings of Allah be upon him) taught his companions how to send blessings upon him, and how to say the adhaan and iqaamah. Acts of worship are tawqeefi (i.e., they are to be done exactly as described in the texts) and nothing is to be added to them that has not been prescribed by Allah. As for saying this word in other contexts, there is nothing wrong with it, because the Prophet (peace and blessings of Allah be upon him) said: “I will be the master of the sons of Adam on the Day of Resurrection and I am not boasting.” End quote. 

Fataawa al-Lajnah al-Daa’imah (7/65).