diff --git a/changelog.txt b/changelog.txt
index 9bd78be14c7..b32a5fa4c08 100644
--- a/changelog.txt
+++ b/changelog.txt
@@ -1,5 +1,8 @@
 *** WooPayments Changelog ***
 
+= 8.1.1 - 2024-08-23 =
+* Fix - Fixed sandbox mode accounts being able to disable test mode for the payment gateway settings.
+
 = 8.1.0 - 2024-08-21 =
 * Add - Add button rules to appearance
 * Add - Add heading rules to appearance
diff --git a/client/components/account-status/account-tools/index.tsx b/client/components/account-status/account-tools/index.tsx
index de772a63fb3..ad73a88fb08 100644
--- a/client/components/account-status/account-tools/index.tsx
+++ b/client/components/account-status/account-tools/index.tsx
@@ -12,7 +12,7 @@ import strings from './strings';
 import './styles.scss';
 import ResetAccountModal from 'wcpay/overview/modal/reset-account';
 import { trackAccountReset } from 'wcpay/onboarding/tracking';
-import { isInDevMode } from 'wcpay/utils';
+import { isInTestModeOnboarding } from 'wcpay/utils';
 
 interface Props {
 	openModal: () => void;
@@ -30,8 +30,8 @@ const handleReset = () => {
 export const AccountTools: React.FC< Props > = () => {
 	const [ modalVisible, setModalVisible ] = useState( false );
 
-	// Only render when in dev/sandbox mode.
-	if ( ! isInDevMode() ) {
+	// Only render when in test/sandbox mode onboarding.
+	if ( ! isInTestModeOnboarding() ) {
 		return null;
 	}
 
diff --git a/client/components/account-status/account-tools/strings.tsx b/client/components/account-status/account-tools/strings.tsx
index 920e5990f0e..f47e8416574 100644
--- a/client/components/account-status/account-tools/strings.tsx
+++ b/client/components/account-status/account-tools/strings.tsx
@@ -7,11 +7,11 @@ import { __ } from '@wordpress/i18n';
 /**
  * Internal dependencies
  */
-import { isInDevMode } from 'utils';
+import { isInTestModeOnboarding } from 'utils';
 
 export default {
 	title: __( 'Account Tools', 'woocommerce-payments' ),
-	description: isInDevMode()
+	description: isInTestModeOnboarding()
 		? __(
 				'Your account is in sandbox mode. If you are experiencing problems completing account setup, or wish to test with a different email/country associated with your account, you can reset your account and start from the beginning.',
 				'woocommerce-payments'
diff --git a/client/components/account-status/account-tools/test/__snapshots__/index.test.tsx.snap b/client/components/account-status/account-tools/test/__snapshots__/index.test.tsx.snap
index 7ba3c01abd5..a3217d4df35 100644
--- a/client/components/account-status/account-tools/test/__snapshots__/index.test.tsx.snap
+++ b/client/components/account-status/account-tools/test/__snapshots__/index.test.tsx.snap
@@ -2,7 +2,7 @@
 
 exports[`AccountTools should NOT render in live mode 1`] = `<div />`;
 
-exports[`AccountTools should render in sandbox mode 1`] = `
+exports[`AccountTools should render in test/sandbox mode onboarding 1`] = `
 <div>
   <div
     class="account-tools"
diff --git a/client/components/account-status/account-tools/test/index.test.tsx b/client/components/account-status/account-tools/test/index.test.tsx
index 2903dc93bd4..ab459c4d741 100644
--- a/client/components/account-status/account-tools/test/index.test.tsx
+++ b/client/components/account-status/account-tools/test/index.test.tsx
@@ -14,14 +14,14 @@ const openModal = jest.fn();
 
 declare const global: {
 	wcpaySettings: {
-		devMode: boolean;
+		testModeOnboarding: boolean;
 	};
 };
 
 describe( 'AccountTools', () => {
 	it( 'should NOT render in live mode', () => {
 		global.wcpaySettings = {
-			devMode: false,
+			testModeOnboarding: false,
 		};
 
 		const { container } = render(
@@ -31,9 +31,9 @@ describe( 'AccountTools', () => {
 		expect( container ).toMatchSnapshot();
 	} );
 
-	it( 'should render in sandbox mode', () => {
+	it( 'should render in test/sandbox mode onboarding', () => {
 		global.wcpaySettings = {
-			devMode: true,
+			testModeOnboarding: true,
 		};
 
 		const { container } = render(
diff --git a/client/components/account-status/test/index.js b/client/components/account-status/test/index.js
index cf9ea0f59b1..0bf382dd8db 100644
--- a/client/components/account-status/test/index.js
+++ b/client/components/account-status/test/index.js
@@ -122,7 +122,7 @@ describe( 'AccountStatus', () => {
 	} );
 
 	test( 'renders account tools', () => {
-		global.wcpaySettings.devMode = true;
+		global.wcpaySettings.testModeOnboarding = true;
 
 		const { container: accountStatus } = renderAccountStatus(
 			{
diff --git a/client/components/sandbox-mode-switch-to-live-notice/modal/index.tsx b/client/components/sandbox-mode-switch-to-live-notice/modal/index.tsx
index 21ee42d83b7..10631780fae 100644
--- a/client/components/sandbox-mode-switch-to-live-notice/modal/index.tsx
+++ b/client/components/sandbox-mode-switch-to-live-notice/modal/index.tsx
@@ -6,6 +6,7 @@ import { __ } from '@wordpress/i18n';
 import { addQueryArgs } from '@wordpress/url';
 import { Button, Modal } from '@wordpress/components';
 import { Icon, currencyDollar } from '@wordpress/icons';
+import { useState } from '@wordpress/element';
 
 /**
  * Internal dependencies
@@ -26,12 +27,16 @@ const SetupLivePaymentsModal: React.FC< Props > = ( {
 	source,
 	onClose,
 }: Props ) => {
+	const [ isLoading, setIsLoading ] = useState( false );
+
 	const handleSetup = () => {
 		recordEvent( 'wcpay_onboarding_flow_setup_live_payments', {
 			from,
 			source,
 		} );
 
+		setIsLoading( true );
+
 		window.location.href = addQueryArgs( wcpaySettings.connectUrl, {
 			'wcpay-disable-onboarding-test-mode': 'true',
 			from,
@@ -45,6 +50,7 @@ const SetupLivePaymentsModal: React.FC< Props > = ( {
 			source,
 		} );
 
+		setIsLoading( false );
 		onClose();
 	};
 
@@ -85,7 +91,12 @@ const SetupLivePaymentsModal: React.FC< Props > = ( {
 				<Button variant="tertiary" onClick={ trackAndClose }>
 					{ __( 'Cancel', 'woocommerce-payments' ) }
 				</Button>
-				<Button variant="primary" onClick={ handleSetup }>
+				<Button
+					variant="primary"
+					onClick={ handleSetup }
+					isBusy={ isLoading }
+					disabled={ isLoading }
+				>
 					{ __( 'Continue setup', 'woocommerce-payments' ) }
 				</Button>
 			</div>
diff --git a/client/components/test-mode-notice/index.tsx b/client/components/test-mode-notice/index.tsx
index 5e799158204..6f13da9def2 100644
--- a/client/components/test-mode-notice/index.tsx
+++ b/client/components/test-mode-notice/index.tsx
@@ -26,7 +26,7 @@ interface Props {
 	currentPage: CurrentPage;
 	actions?: React.ComponentProps< typeof BannerNotice >[ 'actions' ];
 	isDetailsView?: boolean;
-	isOnboardingTestMode?: boolean;
+	isTestModeOnboarding?: boolean;
 }
 
 const nounToUse = {
@@ -50,11 +50,11 @@ const verbToUse = {
 const getNoticeContent = (
 	currentPage: CurrentPage,
 	isDetailsView: boolean,
-	isOnboardingTestMode: boolean
+	isTestModeOnboarding: boolean
 ): JSX.Element => {
 	switch ( currentPage ) {
 		case 'overview':
-			return isOnboardingTestMode ? (
+			return isTestModeOnboarding ? (
 				<>
 					{ interpolateComponents( {
 						mixedString: sprintf(
@@ -163,7 +163,7 @@ export const TestModeNotice: React.FC< Props > = ( {
 	currentPage,
 	actions,
 	isDetailsView = false,
-	isOnboardingTestMode = false,
+	isTestModeOnboarding = false,
 } ) => {
 	if ( ! isInTestMode() ) return null;
 
@@ -176,7 +176,7 @@ export const TestModeNotice: React.FC< Props > = ( {
 			{ getNoticeContent(
 				currentPage,
 				isDetailsView,
-				isOnboardingTestMode
+				isTestModeOnboarding
 			) }
 		</BannerNotice>
 	);
diff --git a/client/connect-account-page/index.tsx b/client/connect-account-page/index.tsx
index e4eb86aef2f..5f7a383d827 100644
--- a/client/connect-account-page/index.tsx
+++ b/client/connect-account-page/index.tsx
@@ -33,7 +33,7 @@ import InlineNotice from 'components/inline-notice';
 import { WooPaymentMethodsLogos } from 'components/payment-method-logos';
 import WooPaymentsLogo from 'assets/images/logo.svg?asset';
 import { sanitizeHTML } from 'wcpay/utils/sanitize';
-import { isInDevMode } from 'wcpay/utils';
+import { isInTestModeOnboarding } from 'wcpay/utils';
 import ResetAccountModal from 'wcpay/overview/modal/reset-account';
 import { trackAccountReset } from 'wcpay/onboarding/tracking';
 import SandboxModeSwitchToLiveNotice from 'wcpay/components/sandbox-mode-switch-to-live-notice';
@@ -96,8 +96,7 @@ const ConnectAccountPage: React.FC = () => {
 	const {
 		connectUrl,
 		connect: { availableCountries, country },
-		devMode,
-		onboardingTestMode,
+		testModeOnboarding,
 		isJetpackConnected,
 		isAccountConnected,
 		isAccountValid,
@@ -467,7 +466,7 @@ const ConnectAccountPage: React.FC = () => {
 					) }
 					{
 						// Show general sandbox notice when no account is connected but sandbox mode is active.
-						! isAccountConnected && devMode ? (
+						! isAccountConnected && testModeOnboarding ? (
 							<SandboxModeNotice />
 						) : (
 							// If we already have a sandbox account connected (but in an invalid state) and
@@ -475,7 +474,7 @@ const ConnectAccountPage: React.FC = () => {
 							// show the switch to live sandbox notice.
 							isAccountConnected &&
 							! isAccountValid &&
-							onboardingTestMode &&
+							testModeOnboarding &&
 							isJetpackConnected && (
 								<SandboxModeSwitchToLiveNotice
 									from="WCPAY_CONNECT"
@@ -551,7 +550,7 @@ const ConnectAccountPage: React.FC = () => {
 								isAccountConnected &&
 									( ! wcpaySettings.accountStatus
 										.detailsSubmitted ||
-										isInDevMode() ) && (
+										isInTestModeOnboarding() ) && (
 										<Button
 											variant={ 'tertiary' }
 											onClick={ () =>
diff --git a/client/data/settings/hooks.js b/client/data/settings/hooks.js
index 8dca41224e6..921a04693ea 100644
--- a/client/data/settings/hooks.js
+++ b/client/data/settings/hooks.js
@@ -85,6 +85,12 @@ export const useTestMode = () => {
 	return [ isTestModeEnabled, updateIsTestModeEnabled ];
 };
 
+export const useTestModeOnboarding = () =>
+	useSelect(
+		( select ) => select( STORE_NAME ).getIsTestModeOnboarding(),
+		[]
+	);
+
 export const useDevMode = () =>
 	useSelect( ( select ) => select( STORE_NAME ).getIsDevModeEnabled(), [] );
 
diff --git a/client/data/settings/selectors.js b/client/data/settings/selectors.js
index 912f67606d6..6855eea10b2 100644
--- a/client/data/settings/selectors.js
+++ b/client/data/settings/selectors.js
@@ -153,6 +153,10 @@ export const getIsTestModeEnabled = ( state ) => {
 	return getSettings( state ).is_test_mode_enabled || false;
 };
 
+export const getIsTestModeOnboarding = ( state ) => {
+	return getSettings( state ).is_test_mode_onboarding || false;
+};
+
 export const getIsDevModeEnabled = ( state ) => {
 	return getSettings( state ).is_dev_mode_enabled || false;
 };
diff --git a/client/globals.d.ts b/client/globals.d.ts
index a97d40f9590..7284347d48e 100644
--- a/client/globals.d.ts
+++ b/client/globals.d.ts
@@ -19,6 +19,7 @@ declare global {
 		};
 		fraudServices: unknown[];
 		testMode: boolean;
+		testModeOnboarding: boolean;
 		devMode: boolean;
 		isJetpackConnected: boolean;
 		isJetpackIdcActive: boolean;
@@ -97,7 +98,6 @@ declare global {
 		accountDefaultCurrency: string;
 		isFRTReviewFeatureActive: boolean;
 		frtDiscoverBannerSettings: string;
-		onboardingTestMode: boolean;
 		onboardingFieldsData?: {
 			business_types: Country[];
 			mccs_display_tree: MccsDisplayTreeItem[];
diff --git a/client/overview/connection-sucess-notice.tsx b/client/overview/connection-sucess-notice.tsx
index 634d84c14fd..0afe9949e75 100644
--- a/client/overview/connection-sucess-notice.tsx
+++ b/client/overview/connection-sucess-notice.tsx
@@ -21,7 +21,7 @@ const ConnectionSuccessNotice: React.FC = () => {
 			},
 			status: accountStatus,
 		},
-		onboardingTestMode,
+		testModeOnboarding,
 	} = wcpaySettings;
 
 	const DismissMenu = () => {
@@ -41,7 +41,7 @@ const ConnectionSuccessNotice: React.FC = () => {
 		);
 	};
 	const isPoDisabledOrCompleted = ! isPoEnabled || isPoComplete;
-	return ! isDismissed && ! onboardingTestMode && isPoDisabledOrCompleted ? (
+	return ! isDismissed && ! testModeOnboarding && isPoDisabledOrCompleted ? (
 		<Card className="wcpay-connection-success">
 			<DismissMenu />
 			<img src={ ConfettiImage } alt="confetti" />
diff --git a/client/overview/index.js b/client/overview/index.js
index a0312035349..5a2cc84ba52 100644
--- a/client/overview/index.js
+++ b/client/overview/index.js
@@ -67,7 +67,7 @@ const OverviewPage = () => {
 		wpcomReconnectUrl,
 	} = wcpaySettings;
 
-	const isOnboardingTestMode = wcpaySettings.onboardingTestMode;
+	const isTestModeOnboarding = wcpaySettings.testModeOnboarding;
 	const { isLoading: settingsIsLoading } = useSettings();
 	const [
 		isTestDriveSuccessDisplayed,
@@ -175,7 +175,7 @@ const OverviewPage = () => {
 					) }
 				</Notice>
 			) }
-			{ isOnboardingTestMode ? (
+			{ isTestModeOnboarding ? (
 				<SandboxModeSwitchToLiveNotice
 					from="WCPAY_OVERVIEW"
 					source="wcpay-overview-page"
@@ -183,7 +183,7 @@ const OverviewPage = () => {
 			) : (
 				<TestModeNotice
 					currentPage="overview"
-					isOnboardingTestMode={ isOnboardingTestMode }
+					isTestModeOnboarding={ isTestModeOnboarding }
 					actions={ [] }
 				/>
 			) }
diff --git a/client/overview/modal/reset-account/strings.tsx b/client/overview/modal/reset-account/strings.tsx
index c097c7f850a..d6bb17d68b7 100644
--- a/client/overview/modal/reset-account/strings.tsx
+++ b/client/overview/modal/reset-account/strings.tsx
@@ -7,11 +7,11 @@ import { __, sprintf } from '@wordpress/i18n';
 /**
  * Internal dependencies
  */
-import { isInDevMode } from 'utils';
+import { isInTestModeOnboarding } from 'utils';
 
 export default {
 	title: __( 'Reset account', 'woocommerce-payments' ),
-	description: isInDevMode()
+	description: isInTestModeOnboarding()
 		? __(
 				'In sandbox mode, you can reset your account and onboard again at any time. Please note that all current WooPayments account details, test transactions, and deposits history will be lost.',
 				'woocommerce-payments'
diff --git a/client/overview/task-list/tasks.tsx b/client/overview/task-list/tasks.tsx
index 4c5830eec24..7781cb6ff6f 100644
--- a/client/overview/task-list/tasks.tsx
+++ b/client/overview/task-list/tasks.tsx
@@ -19,7 +19,7 @@ import { CachedDispute } from 'wcpay/types/disputes';
 import { TaskItemProps } from './types';
 import { getAddApmsTask } from './tasks/add-apms-task';
 import { getGoLiveTask } from './tasks/go-live-task';
-import { isInDevMode } from 'wcpay/utils';
+import { isInTestModeOnboarding } from 'wcpay/utils';
 
 // Requirements we don't want to show to the user because they are too generic/not useful. These refer to Stripe error codes.
 const requirementBlacklist = [ 'invalid_value_other' ];
@@ -88,7 +88,8 @@ export const getTasks = ( {
 		detailsSubmitted &&
 		! isPoInProgress;
 
-	const isGoLiveTaskVisible = isInDevMode( false ) && showGoLiveTask;
+	const isGoLiveTaskVisible =
+		isInTestModeOnboarding( false ) && showGoLiveTask;
 
 	return [
 		isUpdateDetailsTaskVisible &&
diff --git a/client/settings/general-settings/index.js b/client/settings/general-settings/index.js
index 767a342face..da843f4c0cd 100644
--- a/client/settings/general-settings/index.js
+++ b/client/settings/general-settings/index.js
@@ -9,7 +9,7 @@ import interpolateComponents from '@automattic/interpolate-components';
 /**
  * Internal dependencies
  */
-import { useDevMode, useTestMode } from 'wcpay/data';
+import { useTestMode, useTestModeOnboarding } from 'wcpay/data';
 import CardBody from '../card-body';
 import InlineNotice from 'wcpay/components/inline-notice';
 import SetupLivePaymentsModal from 'wcpay/components/sandbox-mode-switch-to-live-notice/modal';
@@ -20,7 +20,7 @@ import { recordEvent } from 'wcpay/tracks';
 const GeneralSettings = () => {
 	const [ isEnabled, updateIsTestModeEnabled ] = useTestMode();
 	const [ modalVisible, setModalVisible ] = useState( false );
-	const isDevModeEnabled = useDevMode();
+	const isTestModeOnboarding = useTestModeOnboarding();
 	const [ testModeModalVisible, setTestModeModalVisible ] = useState( false );
 
 	return (
@@ -28,7 +28,7 @@ const GeneralSettings = () => {
 			<Card>
 				<CardBody>
 					<EnableWooPaymentsCheckbox />
-					{ ! isDevModeEnabled && (
+					{ ! isTestModeOnboarding && (
 						<>
 							<h4>
 								{ __( 'Test mode', 'woocommerce-payments' ) }
@@ -82,7 +82,7 @@ const GeneralSettings = () => {
 							/>
 						</>
 					) }
-					{ isDevModeEnabled && (
+					{ isTestModeOnboarding && (
 						<InlineNotice
 							status="warning"
 							isDismissible={ false }
diff --git a/client/settings/general-settings/test/general-settings.test.js b/client/settings/general-settings/test/general-settings.test.js
index 5c72d4c41b8..0a73147fe8a 100644
--- a/client/settings/general-settings/test/general-settings.test.js
+++ b/client/settings/general-settings/test/general-settings.test.js
@@ -7,12 +7,18 @@ import { fireEvent, render, screen } from '@testing-library/react';
  * Internal dependencies
  */
 import GeneralSettings from '..';
-import { useDevMode, useIsWCPayEnabled, useTestMode } from 'wcpay/data';
+import {
+	useDevMode,
+	useIsWCPayEnabled,
+	useTestMode,
+	useTestModeOnboarding,
+} from 'wcpay/data';
 
 jest.mock( 'wcpay/data', () => ( {
 	useDevMode: jest.fn(),
 	useIsWCPayEnabled: jest.fn(),
 	useTestMode: jest.fn(),
+	useTestModeOnboarding: jest.fn(),
 	useEnabledPaymentMethodIds: jest.fn().mockReturnValue( [ [ 'card' ] ] ),
 	useWooPayEnabledSettings: jest.fn().mockReturnValue( [ false ] ),
 	usePaymentRequestEnabledSettings: jest.fn().mockReturnValue( [ false ] ),
@@ -21,6 +27,7 @@ jest.mock( 'wcpay/data', () => ( {
 describe( 'GeneralSettings', () => {
 	beforeEach( () => {
 		useDevMode.mockReturnValue( false );
+		useTestModeOnboarding.mockReturnValue( false );
 		useIsWCPayEnabled.mockReturnValue( [ false, jest.fn() ] );
 		useTestMode.mockReturnValue( [ false, jest.fn() ] );
 	} );
diff --git a/client/settings/support-phone-input/index.js b/client/settings/support-phone-input/index.js
index f4741f4ddaf..5ae4c4466da 100644
--- a/client/settings/support-phone-input/index.js
+++ b/client/settings/support-phone-input/index.js
@@ -11,7 +11,7 @@ import { useState, useEffect, useRef } from 'react';
 import {
 	useAccountBusinessSupportPhone,
 	useGetSavingError,
-	useDevMode,
+	useTestModeOnboarding,
 } from 'wcpay/data';
 import PhoneNumberInput from 'wcpay/settings/phone-input';
 
@@ -23,9 +23,9 @@ const SupportPhoneInput = ( { setInputVallid } ) => {
 
 	const currentPhone = useRef( supportPhone ).current;
 	const isEmptyPhoneValid = supportPhone === '' && currentPhone === '';
-	const isDevModeEnabled = useDevMode();
+	const isTestModeOnboarding = useTestModeOnboarding();
 	const isTestPhoneValid =
-		isDevModeEnabled && supportPhone === '+10000000000';
+		isTestModeOnboarding && supportPhone === '+10000000000';
 
 	const [ isPhoneValid, setPhoneValidity ] = useState( true );
 	if ( ! isTestPhoneValid && ! isPhoneValid && ! isEmptyPhoneValid ) {
@@ -49,7 +49,7 @@ const SupportPhoneInput = ( { setInputVallid } ) => {
 	}, [ supportPhoneError, setInputVallid ] );
 
 	let labelText = __( 'Support phone number', 'woocommerce-payments' );
-	if ( isDevModeEnabled ) {
+	if ( isTestModeOnboarding ) {
 		labelText += __(
 			' (+1 0000000000 can be used in sandbox mode)',
 			'woocommerce-payments'
diff --git a/client/settings/support-phone-input/test/support-phone-input.test.js b/client/settings/support-phone-input/test/support-phone-input.test.js
index a86c66ae12e..02e4ce0b92c 100644
--- a/client/settings/support-phone-input/test/support-phone-input.test.js
+++ b/client/settings/support-phone-input/test/support-phone-input.test.js
@@ -10,13 +10,13 @@ import SupportPhoneInput from '..';
 import {
 	useGetSavingError,
 	useAccountBusinessSupportPhone,
-	useDevMode,
+	useTestModeOnboarding,
 } from 'wcpay/data';
 
 jest.mock( 'wcpay/data', () => ( {
 	useAccountBusinessSupportPhone: jest.fn(),
 	useGetSavingError: jest.fn(),
-	useDevMode: jest.fn(),
+	useTestModeOnboarding: jest.fn(),
 } ) );
 
 describe( 'SupportPhoneInput', () => {
@@ -103,7 +103,7 @@ describe( 'SupportPhoneInput', () => {
 			'+10000000000', // test phone number.
 			jest.fn(),
 		] );
-		useDevMode.mockReturnValue( true );
+		useTestModeOnboarding.mockReturnValue( true );
 
 		const { container } = render( <SupportPhoneInput /> );
 		expect(
diff --git a/client/settings/transactions/test/index.test.js b/client/settings/transactions/test/index.test.js
index 407602e060b..0726bde8839 100644
--- a/client/settings/transactions/test/index.test.js
+++ b/client/settings/transactions/test/index.test.js
@@ -41,6 +41,7 @@ jest.mock( 'wcpay/data', () => ( {
 	useGetSavingError: jest.fn(),
 	useSavedCards: jest.fn(),
 	useDevMode: jest.fn(),
+	useTestModeOnboarding: jest.fn(),
 	useCardPresentEligible: jest.fn(),
 } ) );
 
diff --git a/client/utils/index.js b/client/utils/index.js
index 71f4c971138..bc24bf44f4f 100644
--- a/client/utils/index.js
+++ b/client/utils/index.js
@@ -42,6 +42,26 @@ export const isInTestMode = ( fallback = false ) => {
 	return !! wcpaySettings.testMode || fallback;
 };
 
+/**
+ * Returns true if WooPayments is in test/sandbox mode onboarding, false otherwise.
+ *
+ * @param {boolean} fallback Fallback in case test/sandbox mode onboarding value can't be found
+ * 							 (for example if the wcpaySettings are undefined).
+ *
+ * @return {boolean} True if in test/sandbox mode onboarding, false otherwise.
+ * 					 Fallback value if test/sandbox mode onboarding value can't be found.
+ */
+export const isInTestModeOnboarding = ( fallback = false ) => {
+	if (
+		! isObject( wcpaySettings ) ||
+		! wcpaySettings.hasOwnProperty( 'testModeOnboarding' )
+	) {
+		return fallback;
+	}
+
+	return !! wcpaySettings.testModeOnboarding || fallback;
+};
+
 /**
  * Returns true if WooPayments is in dev/sandbox mode, false otherwise.
  *
diff --git a/includes/admin/class-wc-payments-admin.php b/includes/admin/class-wc-payments-admin.php
index 018b5d6e1d8..b56c63f24a3 100644
--- a/includes/admin/class-wc-payments-admin.php
+++ b/includes/admin/class-wc-payments-admin.php
@@ -808,11 +808,18 @@ private function get_js_settings(): array {
 			Logger::log( sprintf( 'WooPayments JS settings: Could not determine if WCPay should be in test mode! Message: %s', $e->getMessage() ), 'warning' );
 		}
 
+		$test_mode_onboarding = false;
+		try {
+			$test_mode_onboarding = WC_Payments::mode()->is_test_mode_onboarding();
+		} catch ( Exception $e ) {
+			Logger::log( sprintf( 'WooPayments JS settings: Could not determine if WCPay should be in sandbox mode! Message: %s', $e->getMessage() ), 'warning' );
+		}
+
 		$dev_mode = false;
 		try {
 			$dev_mode = WC_Payments::mode()->is_dev();
 		} catch ( Exception $e ) {
-			Logger::log( sprintf( 'WooPayments JS settings: Could not determine if WCPay should be in sandbox mode! Message: %s', $e->getMessage() ), 'warning' );
+			Logger::log( sprintf( 'WooPayments JS settings: Could not determine if WCPay should be in dev mode! Message: %s', $e->getMessage() ), 'warning' );
 		}
 
 		$connect_url       = WC_Payments_Account::get_connect_url();
@@ -838,7 +845,7 @@ private function get_js_settings(): array {
 			'connectIncentive'                   => $connect_incentive,
 			'devMode'                            => $dev_mode,
 			'testMode'                           => $test_mode,
-			'onboardingTestMode'                 => WC_Payments_Onboarding_Service::is_test_mode_enabled(),
+			'testModeOnboarding'                 => $test_mode_onboarding,
 			// Set this flag for use in the front-end to alter messages and notices if on-boarding has been disabled.
 			'onBoardingDisabled'                 => WC_Payments_Account::is_on_boarding_disabled(),
 			'onboardingFieldsData'               => $this->onboarding_service->get_fields_data( get_user_locale() ),
diff --git a/includes/admin/class-wc-rest-payments-settings-controller.php b/includes/admin/class-wc-rest-payments-settings-controller.php
index 314faad586f..ace444f5ae1 100644
--- a/includes/admin/class-wc-rest-payments-settings-controller.php
+++ b/includes/admin/class-wc-rest-payments-settings-controller.php
@@ -481,6 +481,7 @@ public function get_settings(): WP_REST_Response {
 				'is_wcpay_enabled'                       => $this->wcpay_gateway->is_enabled(),
 				'is_manual_capture_enabled'              => 'yes' === $this->wcpay_gateway->get_option( 'manual_capture' ),
 				'is_test_mode_enabled'                   => WC_Payments::mode()->is_test(),
+				'is_test_mode_onboarding'                => WC_Payments::mode()->is_test_mode_onboarding(),
 				'is_dev_mode_enabled'                    => WC_Payments::mode()->is_dev(),
 				'is_multi_currency_enabled'              => WC_Payments_Features::is_customer_multi_currency_enabled(),
 				'is_wcpay_subscriptions_enabled'         => WC_Payments_Features::is_wcpay_subscriptions_enabled(),
diff --git a/package-lock.json b/package-lock.json
index 2a8e7ae7c3d..096544d3a4a 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "woocommerce-payments",
-  "version": "8.1.0",
+  "version": "8.1.1",
   "lockfileVersion": 3,
   "requires": true,
   "packages": {
     "": {
       "name": "woocommerce-payments",
-      "version": "8.1.0",
+      "version": "8.1.1",
       "hasInstallScript": true,
       "license": "GPL-3.0-or-later",
       "dependencies": {
diff --git a/package.json b/package.json
index a93c5308eee..e77b6facd24 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "woocommerce-payments",
-  "version": "8.1.0",
+  "version": "8.1.1",
   "main": "webpack.config.js",
   "author": "Automattic",
   "license": "GPL-3.0-or-later",
diff --git a/readme.txt b/readme.txt
index 2b540d8eebd..9dd1f7c1582 100644
--- a/readme.txt
+++ b/readme.txt
@@ -4,7 +4,7 @@ Tags: woocommerce payments, apple pay, credit card, google pay, payment, payment
 Requires at least: 6.0
 Tested up to: 6.6
 Requires PHP: 7.3
-Stable tag: 8.1.0
+Stable tag: 8.1.1
 License: GPLv2 or later
 License URI: http://www.gnu.org/licenses/gpl-2.0.html
 
@@ -94,6 +94,10 @@ Please note that our support for the checkout block is still experimental and th
 
 == Changelog ==
 
+= 8.1.1 - 2024-08-23 =
+* Fix - Fixed sandbox mode accounts being able to disable test mode for the payment gateway settings.
+
+
 = 8.1.0 - 2024-08-21 =
 * Add - Add button rules to appearance
 * Add - Add heading rules to appearance
diff --git a/woocommerce-payments.php b/woocommerce-payments.php
index b3aa0cdfe1e..16cecd888db 100644
--- a/woocommerce-payments.php
+++ b/woocommerce-payments.php
@@ -11,7 +11,7 @@
  * WC tested up to: 9.2.0
  * Requires at least: 6.0
  * Requires PHP: 7.3
- * Version: 8.1.0
+ * Version: 8.1.1
  * Requires Plugins: woocommerce
  *
  * @package WooCommerce\Payments