There are a few issues with your question. Firstly, Winston Churchill wasn't appointed as Prime Minister (PM) of the United Kingdom until 1940, whereas Neville Chamberlain held the office of PM in 1939 when the then Allies declared war on Germany on 3 September after its invasion of Poland. Therefore, Churchill never declared war on Germany, Chamberlain did. But why? The rise of the Third Reich is widely covered, but I'll offer a brief synopsis. Essentially, the Treaty of Versailles 1919 humiliated Germany and its economic condition worsened throughout the inter-war period with the economic crisis. The Versailles Treaty would be key to the rise of the Nazi Party and would be central to Hitler's invasion of surrounding states, as the treaty left Germany at a territorial loss. However, the Nazi Party's ambitions were made clear from the early 1920s in Hitler's Mein Kampf, where the ideological ideal of lebensraum (living space), i.e. the conquest and control of vast territory in order to accommodate a growing population and Aryan volk or "higher race", was foreset.

Germany had undergone significant rearmament in breach of the treaty, and Britain was prepared to coexist with such a Germany. As well as this, Britain and France, understandably, feared yet another European war, and were satisfied that the annexation of Austria would be a minute concession compared to war, so they did not interfere. Hitler then wanted to invade Czechoslovakia, and Chamberlain, in a bid to appease Hitler, offered him the Sudetenland, which he accepted. It was this agreement which witnessed Hitler ensure Chamberlain that their two countries would "never go to war with one another again". Chamberlain emerged from the Munich Conference of 1938 proclaiming that the agreement would ensure "peace for our time". Hitler, of course, was also appeasing the Western Allies in falsely reassuring them that there would be peace, when in fact his strategic preparations demanded compartmentalisation of campaigns in order to avoid too many fronts, which would lead to certain defeat. He instead planned to take it campaign by campaign, beginning with Czechoslovakia, which he invaded in 1939, followed by Poland, which lead to the declaration of war on Germany.

During Chamberlain's period as PM, as Antony Beevor points out, Churchill in fact warned of the Third Reich's ambitions. Such people, including Churchill, were shut down, being labelled as warmongers. Nevertheless, it would be Germany's militaristic expansion and breach of the sovereignty of Poland which would ignite Chamberlain's declaration from 10 Downing Street on the 3 September 1939. It was clear that France and Britain would be next, and the declaration was in response to German expansion rather than ideological opposition.

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Sources consulted:

John Baylis, Steve Smith, and Patricia Owens (eds), The Globalization of World Politics: An Introduction to International Relations (Oxford, 2008).

Antony Beevor, The Second World War (London, 2012).

Churchill didn't "declare war" against Germany at all. On the 1st of September 1939 Germany invaded Poland, prompting Britain to issue an ultimatum stating that unless Germany withdrew from Poland by 11 o'clock on the 3rd of September then a state of war would exist between the United Kingdom and Germany. Germany made no such undertaking, leading to a British declaration of war against her.

Churchill was not involved in these events. Churchill was not a member of the Cabinet at the time the decision to declare war on Germany was made. He had resigned from the Conservative front benches on the 27th of January 1931 over the Conservative Party’s endorsement of Dominion status for India (effectively Indian independence within the Empire, in the same manner as Canada, Australia, New Zealand and the Irish Free State). He spent the rest of the 1930s in the political wilderness. He did not return from the wilderness until the day Britain declared war on Germany, when Neville Chamberlain appointed him First Lord of the Admiralty.

The distinction between "German expansionism" and "fascism" seems like a distinction without much of a difference. Territorial expansionism was a key plank of Nazism. To quote Gerhard Weinberg^(1):

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The major theme of the foreign policy sections of Mein Kampf and most of Hitler's second book was this insistence on the conquest of territory towards the Urals.

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So, to ask whether it was German fascism or German expansion is effectively asking if Britain opposed German fascism or just one of the major policies of German fascism. Neville Chamberlain and the British Government were more concerned about Germany’s territorial ambitions rather than, say, the doctrine of Führerprinzip, because of its implications for British security.

Churchill personally opposed Hitler and Nazism from very early on.^(2) In August 1932, while touring Germany, he was invited to meet Hitler by Ernst Hanfstaengl. Churchill agreed to meet Hitler but made it clear to Hanfstaengl that he disagreed with Hitler's rhetoric on Jews, saying that: "Tell your boss from me that anti-Semitism may be a good starter but it is a bad sticker" and asking him "Why is your chief so violent about Jews? I can quite understand being angry with Jews who have done wrong or are against the country, and I understand resisting them if they try to monopolize power in any walk of life; but what is the sense in being against a man simply because of his birth? How can any man help how he is born?". A few weeks after Hindenburg appointed Hitler Chancellor, he told the House of Commons: "Thank God for the French Army.". On the 24th of March 1933 he said:

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When we read about Germany, when we watch with surprise and distress the tumultuous insurgency of ferocity and war spirit, the pitiless ill-treatment of minorities, the denial of the normal protections of civilized society to a large number of individuals solely on the grounds of race... one cannot help feeling glad that the fierce passions that are raging in Germany have not found, as yet, any other outlet but upon Germans

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On the 13th of April he described Hitler's Germany as:

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>[a] most grim dictatorship. You have these martial or pugnacious manifestations, and also this persecution of the Jews

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The myth that Churchill ever admired Hitler stems from some selective reading of an article he wrote in The Strand Magazine in November 1935 (an edited version of which was reproduced in his 1937 book Great Contemporaries). In fact, far from being pro-Nazi, the article was regarded by the Germans as a ‘malicious’ attack on Germany. Churchill’s argument in the article was that time would tell if Hitler would be regarded as a hero or a villain. That hopefully Hitler might change his ways and manner and turn out be a force for peace in Europe.

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It is on this mystery of the future that history will pronounce Hitler either a monster or a hero. It is this which will determine whether he will rank in Valhalla with Pericles, with Augustus, and with Washington, or welter in the inferno of human scorn with Attila and Tamerlane. It is enough to say that both possibilities arc open at the present moment. If, because the story is unfinished, because, indeed, its most fateful chapters have yet to be written, we are forced to dwell upon the dark side of his work and creed, we must never forget nor cease to hope for the bright alternative

And

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the world lives on hopes that the worst is over and that we may yet live to see Hitler a gentler figure in a happier age

Churchill was not positive though that Hitler would change. In the article he discusses at length the dark side of Hitler’s record: rearmament and preparation (both materially and psychologically) for another war in Europe; hatred of the French; persecution of Jews, socialists, communists, trade unionists; and undermining the “historic basis of Christianity”. He said that “thousands of Germans are coerced and cowed into submission to the irresistible power of the Totalitarian State” and described these as “frightful evils”.

Churchill certainly didn’t have a consistently hostile view of Mussolini's dictatorship in the same manner he did Hitler's. There were a number of instances where Churchill complimented Mussolini. The most quoted one was in January 1927 when, as Chancellor of the Exchequer, Churchill visited Rome and twice met Mussolini.^(3) He said to journalists afterwards that:

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I could not help being charmed, like so many other people have been, by his gentle and simple bearing and by his calm, detatched poise in spite of so many burdens. If I had been an Italian, I am sure that I should have been whole-heartedly with you from start to finish in your triumphant struggle against the bestial appetites and passions of Leninism.

He also said:

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Your movement has abroad rendered a service to the whole world. The greatest fear that ever tormented every Democratic or Socialist leader was that of being outbid or surpassed by some other leader more extreme than himself. It has been said that a continual movement to the Left, a kind of fatal landslide towards the abyss, has been the character of all revolutions. Italy… provides the necessary antidote to the Russian virus.

Churchill’s praise of Mussolini was for stopping communism in Italy. It is quite clear - and in fact Churchill admitted this years later - that Churchill regarded communism as a greater threat to Britain in 1927, and to the extent that Mussolini was opposed to communism, he agreed with Mussolini.^(4) Another reason for the praise was just to keep good relations with Italy. Britain was owed £592 million of war debts from Italy, and Churchill had agreed that payment of that debt could be deferred until 1930 (Mussolini offered to decorate him in gratitude but Churchill turned the offer down). Given that, it isn’t surprising Churchill would have complimented his hosts. Between 1941-1945 he gave a lot of praise to Stalin and Soviet Russia for much the same reason - he needed to maintain good relations with that country.

On the other hand, Churchill could be scathing of Mussolini in private, describing him as a “swine” in September 1923.^(5)

Its also pretty clear that Churchill was talking only about Italy. He was not in favour, at any time, of fascism in Britain. A few months after he returned from Italy, he declared that all forms of tyranny – aristocratic, theocratic, plutocratic, bureaucratic, democratic – were equally odious.^(6)

Sources

^(1) Gerhard Weinberg, Hitler's Foreign Policy, 1933 - 1939: The Road to World War II, (Enigma Books, 2010), p.13

^(2) What follows is taken from Andrew Roberts, "Churchill: Walking with Destiny" (Penguin Books, 2018), pp.363-367

^(3) Richard Langworth, Winston Churchill, Myth and Reality: What he Actually Did and Said (McFarland & Co, 2017), p.106

^(4) Roland Quinault, 'Churchill and Democracy', in Winston Churchill in the Twenty-First Century (Cambridge University Press, 2004), ed. by David Cannadine & Roland Quinault) pp.27 - 46, p.33

^(5) Roberts, Op. cit., p.301

^(6) Quinault, Loc. cit