Poison: nasty scare involving half of Nice (7)
I believe the answer is:
arsenic
'poison' is the definition.
(arsenic can be used as a poison)
'nasty scare involving half of nice' is the wordplay.
'nasty' indicates an anagram (a nasty or wrong spelling).
'involving' indicates putting letters inside.
'half of' indicates taking half.
'scare' with letters rearranged gives 'arsec'.
'nice' cut in half is 'ni'.
'arsec' going around 'ni' is 'ARSENIC'.
(Other definitions for arsenic that I've seen before include "Poison used in pesticides and weedkillers" , "Brittle grey-green semi-metal, atomic number 33" , "Poisons in scare" , "Toxic metallic element used as rat poison" , "Poison found in races" .)