Hi Fluffy
I may not be the best person to advise on how to fully decorate your home on £40 - we spend a lot more than that, but I can offer what I know, and hopefully bump this so others see it too.
Where do I start? well, if you're buying a tree, start with decorations for that before the rest of the house. Do you want lights and tinsel, or just baubles? Something I read online recommended 100 fairy lights per foot of tree. I use 440 lights on a 7 foot tree and it's never been a problem.
Tinsel makes a lot of mess, but the needles from your tree will do that anyway!
We have about 80-90 baubles on our 7ft tree, but usually end up leaving the back bare because we don't have enough to fill it entirely.
After the tree is done consider for other areas. In our house we decorate the living room with greenery with big red bows attached, we have a manger scene for the Base of the fireplace and a Christmas village scene for the top. We have various "novelty" lights (santas, snowflakes etc) on the walls, and a large reindeer pulling a sleigh on the living room window. We also have christmassy cushions and candles which come out. A Christmas train which goes around the tree and a Christmas countdown thingy.
We then have fairy lights in the hall, signs for all the doors (things like "north pole this way" or "reindeer ahead") and a 3d rope light sleigh (which I think is actually for outside).
Wreath on the front door. Fairy lights and spray snow on bedroom windows. Big stencilled spray snow display on kitchen window.
What core things could you not be without?
Christmas tree, Christmas train, nativity scene and village scene.
Where do you buy them?
Some where bought, some where made. Most of the village scene was made from oven bake clay, a lot of the tree decs were too. Lights can be bought anywhere from b&q to garden centres, supermarkets to discount shops (home Bargains, b&m, poundstretcher) etc.
Our train was bought from Tesco about 5 years ago, it's still going strong. Nativity was bought from a charity shop.
If you're starting out with nothing I recommend looking for bundles on eBay/Gumtree to get started.
How much do I need for a 5' tree?
How long is a piece of string? It totally depends on how much you want on your tree.
Happy decorating!!!