diff --git a/CHANGELOG.md b/CHANGELOG.md
index db12fb1..6c29cc7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,3 +1,7 @@
+#### 3.5.0
+- Don't disable extractAnnotation task on android libs as it now supports java 8 sourcesS.
+- Bumped default retrolambda version to `2.5.0`
+
 #### 3.4.0
 - Support build dirs with custom names
 - Support com.android.test modules
diff --git a/README.md b/README.md
index 370bd4c..b6002f4 100644
--- a/README.md
+++ b/README.md
@@ -24,7 +24,7 @@ Usage
       }
 
       dependencies {
-         classpath 'me.tatarka:gradle-retrolambda:3.4.0'
+         classpath 'me.tatarka:gradle-retrolambda:3.5.0'
       }
    }
 
@@ -92,7 +92,7 @@ retrolambda {
 ### Using a Different Version of the retrolambda.jar
 
 The default version of retrolambda used is
-`'net.orfjackal.retrolambda:retrolambda:2.3.0'`. If you want to use a different
+`'net.orfjackal.retrolambda:retrolambda:2.5.0'`. If you want to use a different
 one, you can configure it in your dependencies.
 
 ```groovy
diff --git a/gradle-retrolambda/src/main/groovy/me/tatarka/RetrolambdaPlugin.groovy b/gradle-retrolambda/src/main/groovy/me/tatarka/RetrolambdaPlugin.groovy
index 755bae8..da78683 100644
--- a/gradle-retrolambda/src/main/groovy/me/tatarka/RetrolambdaPlugin.groovy
+++ b/gradle-retrolambda/src/main/groovy/me/tatarka/RetrolambdaPlugin.groovy
@@ -28,7 +28,7 @@ import org.gradle.api.plugins.JavaPlugin
 
 @CompileStatic
 public class RetrolambdaPlugin implements Plugin<Project> {
-    protected static String retrolambdaCompile = "net.orfjackal.retrolambda:retrolambda:2.3.0"
+    protected static String retrolambdaCompile = "net.orfjackal.retrolambda:retrolambda:2.5.0"
 
     @Override
     void apply(Project project) {
diff --git a/gradle.properties b/gradle.properties
index a816721..6f4246f 100644
--- a/gradle.properties
+++ b/gradle.properties
@@ -1,3 +1,3 @@
 group = me.tatarka
-version = 3.4.0
+version = 3.5.0
 androidPluginVersion = 2.2.2
diff --git a/test.sh b/test.sh
index c1255b6..b511115 100755
--- a/test.sh
+++ b/test.sh
@@ -2,7 +2,8 @@
 # A simple script to run tests both under java 7 and java 8.
 # JAVA7_HOME and JAVA8_HOME environment variables must be set.
 
+cd ./gradle-retrolambda
 echo JAVA_HOME=$JAVA8_HOME
-JAVA_HOME=$JAVA8_HOME ./gradlew gradle-retrolambda:test
+JAVA_HOME=$JAVA8_HOME ../gradlew test
 echo JAVA_HOME=$JAVA7_HOME
-JAVA_HOME=$JAVA7_HOME ./gradlew gradle-retrolambda:test
+JAVA_HOME=$JAVA7_HOME ../gradlew test