Do you have any other borrowings e.g a mortgage on your home, credit card or overdraft?
The net cost of the interest on your rental property is
Interest paid: 4%
Allowed for tax purposes : 3% (75%)
Tax relief: 1.5% (50% of 3%)
Net interest cost after tax: 2.5%
If you have a home mortgage at 3.5%, you should pay that off first.
If you have no other borrowings, it's 50/50.
It would certainly be better paying off the mortgage with money you have on deposit which could at most be earning 0.5% after tax.
If you think you can earn 2.5% net after tax from investing in shares or something else, then maybe hold onto it.
As you probably won't earn 2.5% after tax with any degree of safety, then the best option is to pay it off.
Brendan