Chaps in hole next to old tree (7)
I believe the answer is:
pimento
'tree' is the definition.
(pimento tree is a kind of tree)
'chaps in hole next to old' is the wordplay.
'chaps' becomes 'men' (chap means a man).
'in' indicates putting letters inside.
'hole' becomes 'pit' (a pit is a large hole).
'next to' says to put letters next to each other.
'old' becomes 'o' (common abbreviation eg in OE for Old English).
'men' placed within 'pit' is 'piment'.
'piment'+'o'='PIMENTO'
(Other definitions for pimento that I've seen before include "Spicy berries" , "Jamaica pepper" , "Vegetable" , "Something spicy" , "Type of pepper" .)