Personally I think Churchill becoming PM and then choosing to fight on from 1940 instead of making peace was the wrong one. Hitler was an Anglophile and at absolute most, as far as terms for the UK, would've requested the return of Germany's 1914 colonies and maybe Malta for Italy. Most likely though, the terms would've been the expulsion of the Governments in exile and recognition of treaties Germany would make with the occupied states of Western Europe as well as a free hand in Eastern Europe (i.e. against the USSR). Things for France and the occupied states would've been harsher but hey, at least they aren't getting bombed and fought over for the next five years either.
From an objective standpoint, this would be far better for the UK and arguably even Europe at large. The British by 1943 were experiencing major manpower shortages and by 1944 were effectively broke, operating on American dime. This enabled Washington to mount increasing political pressure on the UK, such as in 1942 following the loss of Singapore when they forced the UK to end the practice of Imperial Preference; this removed the economic incentive of the Empire and quickly allowed the U.S. to displace the UK in much of its Empire. Further, the aforementioned Japanese advance allowed the United States to become the main security benefactor of Australia and New Zealand. Combined with the loss of economic ties, this along with the loss of India after the war resulted in the UK abandoning East of Suez.
Another major issue was the course of the North Africa campaign, because although the Commonwealth had done the hard fighting by the time of Operation TORCH, American resources-including financial-were leveraged to end British attempts to retain influence in the Middle East. Such ultimately laid the framework for the Petro Dollar, when previously even Saudi Arabia preferred to work with the British. Without American influence afforded by the War, the British plan for the Middle Eastern Supply Center would've went through, combined with security pacts with the Arab emirates and ties to Saudi Arabia would've resulted in a Petro Pound instead of the Dollar.
Finally, other benefits are obvious. With Imperial Preference intact and Anglo-American economic pressure globally, German-occupied Europe would've been behind a tariff wall which would've given British industry preferential access to much of the Global Market; presumably, much of the same would've been true for Japan in Asia. Such would've prevented the same degree of being outcompeted by German and Japanese exports that historically happened Post-War for the UK (and the United States, for that matter). Likewise, a Germany that has a free hand in the East is a Germany that defeats the USSR in 1941 and thereafter occupied up to the Urals, eliminating the threat of Soviet Bolshevism to British colonies. Thus, by 1945 instead of being a broken husk, the Empire is still financially viable and secure under the auspices of the UK, with no American pressure being viable and no real threat of Soviet arms (as well as money, advisers, UN voting, etc) to undermine the Empire.
Take in note, this is the case for an objectively better situation for the UK's national interests, not on Humanitarian grounds for European people. Still, on that note I think things in theory would be better too. Without the Anglo-American blockade against European imports, hunger-at least in Western Europe-would be much reduced. Jews and others could still flee the continent, as the German policy at this time was either sending them to Palestine, the Americas or, as they were considering at the time of the French defeat, the Madagascar Plan so one could avoid the Holocaust via this. I am not sure if the Hunger Plan for the defeated USSR would be avoided given the ability to import, but it's at least possible in theory.