Are there times when he's not like that, ie when he's happy, lovely to be around? If so, when are those times? Is it when he's well-rested, at the weekend, when spending 1-1 time with you, when doing an activity, when running around outside, or when away from his sister, when colouring, something else?
I'd be inclined to work out that part and then try to do more of that thing - eg perhaps more quality time with one parent or both? Or more sleep? Or more time away from dusted? Or more time outside / less screen time?
I also think after school in year R is a hot spot due to decompression so I'd be making everyone's life easier and being a bit more relaxed at that time of day in particular. My son used to call me a poo poo head in Reception after school and I'd just say ok then, oh dear, sorry you feel that way, as I knew he was exhausted and wrestling with the adjustment and transition, and he never ever spoke to me like that at other times, and was normally a delight.
Does he do after school club and stay late? Or do you pick him up at 3ish?
If he's at after school club they get tired and hungry so I'd have some yummy snacks lined up ready to go as soon as you see him followed by a yummy favourite tea / picky plate. Then maybe set up a few gentle toys for him to play as soon as he walks through the door (Lego / train / colouring whatever he enjoys) and switch on some cartoons. Let him decompress. It's tricky but can his sister be occupied away from him for the first while when he gets home, either with other parent or if that's not possible sitting having her tea or doing her own activity in a different area, so he gets some space? (Only if you think this could be overwhelming him).
If you do suspect that these behaviours started around the time his sibling arrived then the timeouts and punishments whereby he's put by himself will feel like further rejection.
I do think it's fine to say "we don't call each other names / we speak kindly to each other" but imo timeout and naughty step has been debunked due to the impact on the child's self perception. They are not mature enough at that age to reflect upon their behaviour in solitude.
No doubt others will be on to say consequences are the main priority and he should be punished but I would honestly be wanting to look at the root of the issue, which will always be his feelings, and find a way to support him there.
I know everyone always recommends this book but if you haven't read it then Phillippa Perry does have helpful wisdom on this in The book you wish your parents had read.