Unearned income is taxed at your marginal rate of either 10, 20 or 40%. (As oppose to 10, 22 and 40 for earned income and 10 and 32.5 for dividend income).
To be paying tax at 40% you must have taxable income (after allowances) in excess of Â£32,400.
Taxable rental income is indeed after any allowanbe expenses such as loan interest, repairs, insurance, management fees etc.
MMI, The Surrey Accountants