Carriage cutting horse in two — that's ghastly (7)
I believe the answer is:
macabre
'that's ghastly' is the definition.
('macabre' can be a synonym of 'ghastly')
'carriage cutting horse' is the wordplay.
'carriage' becomes 'cab' (cab is a kind of carriage).
'cutting' is an insertion indicator (some letters cut their way into a word).
'horse' becomes 'mare' (mare is a kind of horse).
'cab' placed inside 'mare' is 'MACABRE'.
'in two' acts as a link.
I am not very happy about this link. Some or all of it may be part of another bit of the clue.
Can you help me to learn more?
(Other definitions for macabre that I've seen before include "Dark and disturbing" , "Ghostly appearance" , "'Sinister, gruesome (7)'" , "Chilling" , "Gruesome, suggesting death" .)