To use the iOS 10.1 beta you need to use the Xcode 8.1 beta. Xcode 8 doesn’t support the iOS 10.1 beta.
The public Xcode 8 release does not support iOS 10.1 beta. Apple released beta builds of macOS Sierra 10.12.1 and iOS 10.1 a few days ago. But watchOS, tvOS and Xcode are not included in Apple’s public betas.