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I had exactly the same problem. Although BT say tethering was allowed when I signed up. No Data was being passed through the connection. The only way I could get it going was to use Klink on my Android Phone.
Luckily I was within my 14 day cooling off period, so I bailed out. Rubbish servce.
I knew when I signed up there was no tethering option, but this is a new message I only received yesterday. Seems as though they have come into the modern world now. I have great mobile service with them, 20gb for £16 a month, can't be beaten, good coverage at our caravan too, much better than my previous provider Tesco/O2.
Up date from BT technical live chat....seems you can only tether from android to android phones, though I still couldn't get that to work. But you CAN'T tether from android phone to IOS iPad.....so in reality BT tethering isn't the tethering as everyone knows it. Did expand to say there was compatibility issues and these should resolved by the end of September 2016. So why fire out a text saying brilliant news BT now supports tethering when in reality it doesn't? Must try harder BT .......waiting with baited breath till the end of September 2016.
Why does this not surprise me. At least my iPad sees my android phone...an oldish Motorola Moto G with android 5.1, they say it should work of anything over 2.2. Tried tethering another android phone and android tablet without any luck...they all tether but no data.....any ideas....or am I just unlucky....seems they 'are working on it' but why roll it out when it clearly doesn't seem fit for purpose.