As Mark pointed out on Debop’s answer, you have to configure both compileKotlin and compileTestKotlin. You can do it without duplication this way:
tasks.withType(org.jetbrains.kotlin.gradle.tasks.KotlinCompile).all {
kotlinOptions {
jvmTarget = "1.8"
}
}
For a pure Kotlin project, I don’t think the options sourceCompatibility and targetCompatibility do anything, so you may be able to remove them.
Ref: https://kotlinlang.org/docs/reference/using-gradle.html#compiler-options