The most common and most likely answer to this crossword clue is the 5 letter word HOLLY
I've seen this crossword clue in Independent
H
O
L
L
Y
Buddy explains!

The straight part
We know that "Xmas decoration" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case xmas decoration = holly.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does HOLLY mean?
HOLLY noun- Any of various shrubs or (mostly) small trees, of the genus Ilex, either evergreen or deciduous, used as decoration especially at Christmas.
- The wood from this tree.
- (with a qualifier) Any of several unrelated plant species likened to Ilex because of their prickly, evergreen foliage and/or round, bright-red berries