What do they know of love? The British King's marriage to an American commoner, sparks a scandal. In the fallout, with the Monarchy refusing to back down, parliament resigns and in the ensuing chaos the overseas dominions filibuster their participation in the British Empire. However, most colonies are forced to remain loyal.
First, the British ensure the loyalty of India, granting large reforms in the colonial administration, doing away with the princely states and instead moving towards an autonomous nation. However, the muslim minority are not happy, afraid of being sidelined by a Hindu majority. When a two-state solution is proposed, it is declined by the British authorities, and so the Indian Civil War begins. Even through the rebellion was relatively brief, many tens of thousands Indians perished in the domestic sectarian violence. However, order was mostly restored and so Indian remained united as a British colony.
In order to re-assert the King's authority over the wayward commonwealth states, the King decided to embark on a path of imperialistic militarism. The secret service agency was greatly expanded and used to infiltrate the government of Canada, preparing a base of loyalists who would collaborate in the conflicts to come. After sufficient preparations, a coup was launched, and an invasion simultaneously as well from Newfoundland. Quickly, Canada was captured as elite tanks units quickly outmaneuvered the border guards and ran straight to Toronto and Montreal. With the collapse of Canadian resistance, Australia, South Africa, and New Zealand all gave in to British demands. Ireland was also re-incorporated after a short war.
Meanwhile, Japan's government succumbed to a coup by the militarists who dismantled democratic institutions to return to the absolute monarchy of the emperor. The Armed forces were re-organized and prepared for the eventual takeover of China. However, it was discovered that the authorities in Manchuria planned to use Puyi as a figurehead to stage their own contest in the struggle for control of China. This would be inconvenient for Japan's plans, so the farce of Manchurian independence was ended and the state was annexed as a settler colony for the Japanese nation.
Being both Monarchies, and both having extreme imperialist ambitions, Japan and the United Kingdom had secret negotiations to enter into alliance. The target: America. Now that the British Empire was establishing new heights for its glory, the new goal was to unite the Anglophone countries and use them as a base to dominate the world. For Japan, the USA held vital territories in Asia. Together, they cooperated to prepare the greatest surprise invasion in all of history.
The British mobilized forced from their various colonies around the world to fill the Canadian-American border west of the Great Lakes, while in the east the English divisions were equipped with tanks and trucks to make a mad dash to capture the concentrated population and industry centers to prevent organized resistance. In Asia, Japan would launch naval invasion to capture the Philippines.
The plan went off without a hitch, and went even better than initial expectations. The British interventions in colonies around the world, paired with the growing threats of the Nazis in Europe and Japan in Asia meant that American politicians had pushed for re-armament. However it seems they had got their industry prepared for war without actually mobilizing their manpower into a large standing army.
The result was the painless capture of a heavy industrial base ready to contribute the armament of British forces in the near future. After exactly 155 years of independence, the republic was snuffed out and British monarchism returned. At first, the was some sporadic resistance that threatened to impose costs on the new administration, but with the arrival of the Queen and the inclusion of white Americans into the privileged top of the imperial racial hierarchy, disobedience was quickly abandoned by the vast majority of the population as the Empire offered new economic opportunities that turned the Great Depression around, also the celebrity status of the Queen helped the propagandists re-shape American culture into being loyalist. For the parts of the empire that were primarily English-speaking plus India, Britain invited to the Imperial Conference, where an Imperial Federation was proposed. This resolution was accepted, resulting in the full integration of the Empire as not a series of dominions held together by commonwealth, but rather as a singular nation.
As for Japan, with the colonization of the Philippines and the intervention of the USA ruled out, the invasion of China could now begin. Invasion forced immediately captured all ports along the coast, with a brutal battle being fought on the shores and docks of Shanghai, where the largest invasion force landed. From there, they drove straight to Nanjing and captured it. along the coastal areas, Japanese agents had already set up collaborators, so the army was able to quickly set up an effective occupation government, allowing it to more effectively push into the interior while maintaining supply routes. The Chinese army was shattered under the superior firepower of tanks, artillery, and aircraft that the Japanese had brought with them. The average battle had a 10-to-1 kill ration in favor of Japan, with some sections of the front reaching averages of better than 20-to-1 as Chinese units were outmaneuvered, encircled, and entirely wiped out.
The Chinese communists, who had allied with French, did not directly intervene, but did create vast resistance networks to infiltrate and sabotage Japan, and would the main thorn in the side of Japan. Japan could not just continue the invasion of China, because this would draw Japan into a world war with the European powers and the Soviet Union, which Japan wanted to avoid. So they simply had to waste their time cracking down on resistors in-place without addressing the source of the issue.
In Europe, The Germans bullied their neighbors for territories, but eventually the Yugoslavians called their bluff. In response, Germany invaded the country. The Kingdom of Romania was attempting to secure its influence in Europe to guard it against both fascists and communists, so came to the defense of Yugoslavia. The Czechs and Poles joined the Romanian alliance to fend off the Nazi menace. Germany, still hoping to use intimidation to isolate its enemies only provoked stronger resistance as the Lithanians, Greeks, and Turks joined to end the aggression. Portugal attempted a surprise invasion of Spain but was defeated. Hungary tried the same to the Czechs but was defeated.
Germany was much stronger than the defending countries on an individual basis, but its diplomatic flops had created too many enemies to deal with simultaneously. So Italy was recruited. By promising huge territorial gains, the vainglorious Mussolini was manipulated into joining the war. It might have been enough to turn the tide in favor of the Nazis...
Knowing that having peaceful democratic neighbors would ultimately be better than having dangerous Nazis or Soviets competing over control Europe, Britain decided to help the democracies. When word came in that Hitler was preparing to invade the low countries, the time to act was now. Britain would invade the low countries first, and then from there launch a lightening invasion into Germany before they could mobilize enough forces to counter the unexpected thrust. Also, those juicy belgian and dutch colonies were a nice side bonus!
The invasion was a complete success. The Dutch had built their defenses expecting enemies to come from the east by land, not by the sea from west. The new British tanks, that were built to be both heavily armored yet fast with powerful engines, were quickly placed on the Dutch-German border and the invasion started. It took the Nazis by surprise to badly, that once the initial response was swept aside at Hamburg, the British tank armies drove unopposed to Berlin. After that, the Nazi armies fell back to establish a strong defensive position in southern Germany, but the British were able to pierce the line before strong entrenchments could be built, and were able to drive to Munich and Vienna. With the Italian army surrounded and captured in the Alps and Yugoslavia, Italy overthrew the fascist government and asked for terms. The Italians still retained enough diplomatic independence to force the Greeks to join the Imperial bloc, though the British did sweeten the deal by delivering Italian-occupied Dodecanese islands and the promise of a referendum on Cyprus.
With the war over, most democracies left the Romanian alliance, except for Poland and Yugoslavia, and Romania's puppets in Hungary and Bulgaria. Much of European democracies now align more with Republican Spain. The Soviet Union had remained very quiet after their brief civil war that saw the deposition of Stalin in favor of a more "liberal" government that gave more thought to peaceful development and expanded rights for the constituent soviet republics. With peace in Europe, the Japanese busy digesting China, the Imperial Federation stands astride the world.